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Tuesday 28 March 2017

New price hikes hit consumers

Householders squeezed by increases to mortgage, fuel and clothing costs

Aideen Sheehan Consumer Correspondent

HIGHER clothes prices and bigger mortgage bills pushed the cost of living up in September, bringing the annual inflation rate to 2.6pc.

Consumers faced a further squeeze on their wallets as living costs rose 0.3pc last month alone.

And hikes to gas and electricity bills in October will further hit householders, analysts warned.

The end of the summer sales saw clothes and footwear prices jump by 5.6pc in the month -- although on the plus side they're still slightly lower than they were a year ago.

Homeowners saw their mortgage repayments rise by another 3pc last month -- and they're now 17pc higher than last year, although householders will be hoping the European Central Bank moves to reduce interest rates soon.

However, this is unlikely to happen before December, Bloxham stockbrokers warned.

The price of petrol rose slightly in the month, while diesel fell, but overall fuel costs are still around 15pc higher than a year ago.

Bus fares soared by 8.8pc in September, but airfares fell significantly, declining by almost 17pc in the month.

Electricity prices rose by another 1.6pc in September, while rents rose by 0.4pc.

Hotel prices are 2.7pc cheaper than a year ago, while restaurant prices are 1.6pc lower, indicating that VAT cuts this summer are being passed on.

Demand

The increase in the inflation rate to 2.6pc was disappointing, as it had been expected to remain steady at 2.2pc, said Bloxham stockbrokers analyst Alan McQuaid.

With jobs growth not expected until well into next year, and further austerity measures due, consumer demand was likely to remain weak while the price of imported goods, including food and clothes, could fall thanks to sterling weakening against the euro, he said.

However, higher energy costs will continue to put upward pressure on inflation.

The Irish Small and Medium Enterprises Association (ISME) warned that businesses would also struggle from the energy price hikes, as these were such a big part of their costs.

"If the government is serious about promoting an export-led recovery, why are they consistently undermining this objective by allowing incessant cost increases to business?" asked ISME chief executive Mark Fielding.

Irish Independent

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