Lifting of restrictions and housing costs drive inflation to two-year high of 1.7%

The rate of inflation jumped to a two-year high of 1.7 per cent last month as the easing of Covid-related restrictions and increased housing costs fuelled inflationary pressure in the Irish economy for the first time in several years.

Figures from the Central Statistics Office (CSO) show the acceleration in price growth was driven by increases in the cost of housing, water, electricity, gas and other fuels, which rose 5.4 per cent.

Within this category, private housing rents were up 2.6 per cent year on year while the cost of mortgage interest rose 2 per cent.

Increases

There were also price increases in transport (up 3.6 per cent), restaurants and hotels (up 2.9 per cent), and alcoholic beverages and tobacco (up 1.8 per cent).

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There were decreases in the cost of clothing and footwear (down 2.1 per cent), communications (down 1.9 oer cent), and food and non-alcoholic beverages (down 1 per cent).

The European Central Bank (ECB) said the recent strengthening of price growth across the euro area is down to "transitory factors" connected to the resumption of economic activity after lockdown, and higher oil prices.

Similarly the US central bank has said rises in inflation this quarter would be transient and would not threaten price stability, one of its key mandates. – Additional reporting: Reuters