Shoppers must fork out more for food as cost of living climbs
CONSUMERS will be hit with rising food bills in coming months as new figures show the cost of living has risen again since last year.
Analysts last night warned that rising world prices for basic staples such as bread and milk could soon filter through to shoppers.
The latest inflation figures show a slight increase in food prices (+0.2pc) last month, with particularly sharp rises for flour (+8.8pc), coffee (+4.6pc), tea (+3.9pc), cheese (+2pc) and dairy products (+1.8pc) in line with soaring global prices.
Although food prices are still 1.4pc cheaper than they were a year ago, that could be set to change.
"The main upward pressure on the Irish consumer price index will come from mortgage interest rates and food/energy costs," Bloxham economist Alan McQuaid told the Irish Independent.
He added that consumers were being cushioned against food price hikes because of the strength of the euro and weak domestic spending. But he said this could change if the euro weakened, as many expected, and commodity food prices continued to rise internationally.
"It's things like bread, milk, dairy, the staples that could all go up," Mr McQuaid said.
New Central Statistics Office figures show overall consumer prices in Ireland were unchanged in October and the cost of living is now 0.7pc higher than a year ago.
This means annual inflation has risen for the third month in a row after nearly two years of falling prices.
An electricity price levy added 4.6pc to household power bills, while the new prescription levy for medical card holders added 6.5pc to prescription drug bills.
Communications costs have also risen by 2.9pc in recent months as many mobile phone companies have increased tariffs to compensate for falling customer revenues.
And although mortgage interest costs declined slightly in October, they are up nearly 25pc in the last year.
Davy Research also warned that upward price pressure in the future would stem largely from international factors such as food and commodity prices.
However, Davy analyst Aidan Corcoran said that because budget cuts were set to postpone a recovery in domestic demand, price deflation could continue next year, which would help consumers hit by a loss in disposable income.
The Irish Small and Medium Enterprises Association (ISME) called on the Government to take action.
"It is absolute nonsense for the Government to be cheerleading the drive in exports, while at the same time increasing costs on business," ISME chief executive Mark Fielding said.