Inflation remains at near four-decade high of 9.1% in July as cost-of-living crisis deepens

Headline inflation in the Irish economy remained at a 38-year high of 9.1 per cent last month, deepening the cost-of-living crisis for low- and middle-income households. Figures for the agricultural sector showed huge spikes in energy costs, fertiliser and feed prices.

The rising cost of energy, transport and food were main drivers of price growth.

The latest figures from the Central Statistics Office (CSO) show prices on average rose by 0.4 per cent month-on-month in July, but this was down from a monthly rise of 1.3 per cent recorded in June and was also the lowest monthly rise since January.

Inflation for the 12 months to July, however, remained at 9.1 per cent, the fastest rate of price growth seen in the Irish economy since 1984.

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A breakdown of the figures show food prices were up by over 8 per cent on an annual basis. Within the food category, bread and cereals were up 9.5 per cent; meat was up by 11 per cent; while the cost of milk, cheese and eggs rose by 13 per cent.

The cost of electricity, gas and other fuels, meanwhile, rose by 21.6 per cent year-on-year. The cost of electricity was, however, up 40 per cent, while gas prices rose by over 56 per cent. The cost of home heating oil has soared by 92 per cent since this time last year.

The cost of motoring has also risen sharply, with petrol and diesel prices up 35 per cent and 45 per cent respectively. Airfares were up by an average of 48 per cent since July last year.

The CSO said that diesel at €2.09 per litre and petrol at €2.15 per litre were up by 70 cents per litre (50.7 per cent) and 65 cents per litre (43.7 per cent) respectively between June 2021 and June 2022.

Separate CSO data on agricultural prices suggested input prices across the sector rose by over 40 per cent in the year to June. This included a 145 per cent hike in fertiliser prices; a 60 per cent rise in energy prices; and a 32 per cent rise in feed prices.

The Irish Farmers’ Association (IFA) said better prices for farm commodities were being wiped out by “unprecedented increases” in the cost of inputs. Prices paid to farmers were up nearly 30 per cent but the hike in input costs is running at 40 per cent, it said.

IFA farm business chair Rose Mary McDonagh said: “Farmers cannot be expected to carry on regardless. Many operations will simply go out of business if targeted measures aren’t introduced. Unlike others, farmers haven’t the luxury of being able to pass on the added cost of production to others, and so cannot be left to carry all the risk.”

Commenting on the inflation data, economist Austin Hughes said: “The current degree of pressure on costs in areas such as energy and food, together with spill-over effects into other areas including an expected sequence of mortgage rate increases, mean that any pullback from a near-term peak through late 2022 and into 2023 is likely to be modest and may be slow to materialise in any meaningful way.”