Higher housing costs hold Irish inflation close to 1%

Higher housing costs kept Irish inflation close to 1 per cent in October, according to the Central Statistics Office.

The latest Consumer Price Index shows prices across the State rose 0.9 per cent in the 12 months to October, unchanged from the previous month.

The main driver was an increase in the cost of housing, water, electricity, gas and other fuels, which rose 5.5 per cent.

Transport costs also increased 3.3 per cent, mainly due to higher prices for diesel and petrol, which were partially offset by a decrease in air fares.

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The cost of alcoholic beverages, tobacco, restaurants and hotels was also up 2.1-2.6 per cent, primarily due to higher prices for alcoholic drinks and food consumed in licensed premises.

Conversely, the price of furnishings and household equipment fell 4.3 per cent. Inflationary pressure in the Irish economy has increased modestly in the past few months after several years of weak or non-existent price pressure.

Stimulus programme

Euro-zone inflation accelerated last month, supporting the European Central Bank’s decision to wind down its stimulus programme even if growth is slowing more sharply than forecast.

Consumer price growth in the euro zone was 2.2 per cent in October, up from 2.1 per cent previously, holding above the ECB’s target of just below 2 per cent for the fifth month running.

Having unleashed unprecedented stimulus over the past four years, the ECB is now slowly ending its stimulus, satisfied that inflation is moving back to target, even if higher oil prices are accounting for much of the recent rise.