Inflation at near five-year low as consumer activity remains muted

Inflationary pressure in the Irish economy remains weak, with the latest figures showing consumer prices fell by 0.4 per cent in June compared with the same month last year. This was almost unchanged from the previous month when prices fell by 0.5 per cent in annual terms, officially a five-year low.

The imposition of restrictions to suppress the Covid-19 virus has curtailed consumer activity and turned inflation into deflation.

The latest consumer price index from the Central Statistics Office (CSO) shows the average cost of clothing and footwear fell by more than 5 per cent year on year in June. Similarly communications, which include phone costs, fell by 4.9 per cent.

There were also declines in the prices of household equipment and routine household maintenance (3.6 per cent) as well as housing, water, electricity, gas and other fuels (2.3 per cent).

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In contrast, there were increases in education (4.1 per cent), health (2.6 per cent), alcoholic beverages and tobacco (2.4 per cent) and recreation and culture (1.6 per cent).