Sunday 21 January 2018

Cuts in price of alcohol help to stall inflation

Charlie Weston Personal Finance Editor

CHEAPER drink and airfares gave householders a surprise boost last month as new figures show the cost of some goods has dropped marginally

Overall consumer prices were flat in April as the cost of wine, beer, cigarettes, airfares, mortgages, rents and home insurance all came down.

Strong competition in the retail sector saw wine prices fall by 3.6pc, while beer also dropped in price.

David Fitzsimons of Retail Excellence said aggressive price cuts on wine and beer by large multiples had been stepped up recently. Retailers were conscious that the Government was considering a ban on below-cost selling of alcohol and looking at ways to stop retailers using booze as a promotional tool.

This had prompted stores to up their attempts to use alcohol to get customers in the door before any curbs , he said.

The figures also show a fall in chocolate and confectionery prices, despite a 36pc rise in the cost of sugar in the last year.

There is also evidence that retailers were holding back from passing on December's rise in VAT to 23pc, economist with Goodbody Stockbrokers Juliet Tennent said.

There were price declines for clothing, footwear and furnishings, household equipment and maintenance, all sectors exposed to the higher VAT rate.

The price falls bucked a trend that sees households continue to be squeezed by rises in energy costs, petrol and health insurance premiums.

Rising energy costs was mainly responsible for prices rising 1.9pc over the last year.

The annual inflation rise was lower than expected, due to falls in the price of home furnishings and small electrical goods, along with lower charges for some technology goods and toys, clothing and footwear.

The biggest cost increases over the year were in education, with prices and fees up 9.4pc and transport up 5.7pc as a result of rising fuel charges.

Weak demand due to the impact of higher taxes and unemployment on households was cited by economists as the reason prices were flat in April.

Petrol was up again last month, and has now risen by 12pc in the past year. Diesel is up 9.3pc over the last 12 months.

Irish Independent

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