Annual inflation up 1.7% in January

CONSUMER PRICES rose 1.7 per cent in the year to January. This follows an annual rise of 1.3 per cent recorded in December.

The yearly increase was driven by a 9.6 per cent rise in the cost of housing, water and fuels, according to new data from the Central Statistics Office.

Transport also increased year-on-year by 3.1 per cent, while the cost of communications was 3 per cent higher.

Clothing and footwear prices fell by 4.3 per cent, while prices of furnishings and household equipment fell by 3 per cent.

Education also recorded a decline of 3 per cent.

The Irish Congress of Trade Unions (Ictu) described the annual rise as part of a “very worrying upward trend”.

“People are now being squeezed between the pincers of falling pay and remorseless price rises,” said Ictu economic adviser Paul Sweeney.

“Yet Government continues to attack people’s incomes. They used to justify this with the claim that prices were falling sharply. But this is the sixth straight month of rising prices,” said Mr Sweeney.

On a monthly basis, consumer prices fell 0.2 per cent from December, less than the 0.6 per cent decline recorded in January 2010.

Winter sales lowered clothing and footwear prices which were down 9.3 per cent compared to December.

The cost of furnishings and household maintenance was down 2.6 per cent.

Health costs rose by 3.3 per cent, driven by the rising costs of hospital services. Alcohol and tobacco were also more expensive, rising 1.5 per cent.

Ibec said the rise in the consumer price index was “largely as expected”, and predicted the rate of inflation would rise further over coming months before subsiding in the second half of the year.

“Commodity prices have continued to edge higher in recent months, and this is evident in the latest figures: food prices were up 0.3 per cent in the month, while fuel prices rose by a further 2 per cent,” said said chief economist Fergal O’Brien.

“Petrol prices have now increased by 15 per cent over the past year, and diesel prices are up 18 per cent,” he said.

The Small Firms Association said that although the drop in prices for clothing, footwear and household goods were benefiting consumers, they were not helping small businesses.

“The Government needs to take firm action to reduce the costs it imposes on the economy so that it is not having knock-on negative impacts on small businesses who are fighting for survival,” said association director Avine McNally.

The EU Harmonised Index of Consumer Prices (HICP), which excludes items such as mortgage interest, fell by 0.3 per cent in the month. The index rose 0.2 per cent on the year.

This was the first year-on-year increase in the index since February 2009.

“Until this latest figure, Ireland was the only country within the EU-27 to have a negative reading on the HICP, reflecting the severity of the economic downturn,” said Bloxham chief economist Alan McQuaid.