Inflation here now just half of European average
THE cost of living is rising more slowly here than anywhere else in Europe.
Irish inflation is just half the EU average and is way behind that seen in Britain, according to the latest figures published yesterday.
They show that while prices here rose by 0.1pc in May, thanks to higher prices for men's clothes, hotels, and alcohol, the increases are lower than in recent months, so our annual inflation rate has fallen to 2.7pc.
That's down from over 3pc in March and April, the Central Statistics Office figures show. However, using the EU measure which excludes mortgage costs, the Irish inflation rate is 1.5pc compared to 3.2pc on average in Europe and 4.5pc in the UK.
But unfortunately price hikes throughout Europe spell bad news for Irish consumers, with the European Central Bank signalling yesterday they will raise interest rates next month in a bid to curb inflation.
Irish analysts said the drop in Irish inflation was welcome news for hard-pressed consumers.
"The recent decision to cut the VAT rate on various consumer-related items should also help to keep inflation down over the remainder of the year," said Bloxham stockbroker analyst Alan McQuaid.
The Irish Small and Medium Enterprises Association warned against complacency about the fall in inflation.
"With inflation still at relatively high levels, the government needs to put the brake on rising costs, particularly those that directly affect hard-pressed businesses," said ISME chief executive Mark Fielding.
Mortgage interest payments and energy increases account for most of this year's inflation, said Conall Mac Coille of Davy stockbrokers.
However, with oil prices up 50pc in the last year, it looks unlikely there would be a similar rise over the next 12 months.
Telephone and communication costs rose by 4.3pc in the year, while health costs are up by 4pc thanks to double-digit hikes for hospital services. Food inflation has been kept in check by tight household spending, with prices up just 0.4pc in the year. Alcohol prices are 1.2pc cheaper than a year ago.