Sunday 26 May 2019

Energy, fuel and grocery price hikes drive rate of inflation higher

Prices of butter, flour, fish and cereal products higher (Stock)
Prices of butter, flour, fish and cereal products higher (Stock)

Charlie Weston Personal Finance Editor

Rises in the cost of energy, petrol and diesel along with higher prices of some groceries has pushed up the rate of inflation.

One of the biggest risers was home-heating oil which shot up by 29.4pc in the year to June.

There was also another rise in rental costs, some diary products, and cigarettes, according to the latest consumer price index from the Central Statistics Office (CSO).

The CSO said prices on average were 0.4pc higher in June compared with the same month last year.

The inflation rate was 0pc in 2016.

Rises in some goods this year were slightly offset by falls in other products, but overall prices are up.

Prices of butter, flour, fish and cereal products were higher last month compared with a year ago. Also up was the price of cigarettes.

The ongoing accommodation squeeze saw rental costs being 6.1pc higher last month on the year.

Eight energy companies have announced price rises, with the first from SSE Airtricity set to be implemented from tomorrow.

The rises are between 12pc and 5pc, and are likely to add up to €80 a year to the average electricity bill.

But energy price increases announced at the end of last year have seen the costs of electricity and gas rise by 9.2pc in the past year, the CSO said.

Petrol is up 9.7pc, with diesel up 12.2p on the year, as higher wholesale oil prices being blamed for higher costs at the pumps.

Motor insurance costs are down 11.5pc in the year, according to the statistical body, but that is not the experience on the ground for many drivers.

Economist with Merrion Stockbrokers Alan McQuaid said inflationary pressures were picking up, with oil prices set to be a key determinant of the inflation rate here.

He said that with the economy continuing to grow strongly, the more immediate worry on the domestic inflation front centres around increased wage demands, particularly in the public service.

Mr McQuaid said that as the labour market approaches full employment levels, wage growth will pick up.

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