The rate of inflation remained at its highest level for four years in June, the Central Statistics Office (CSO) said yesterday. Prices were 3.9 per cent higher in June than a year ago. It follows a similar increase in May, writes Marc Coleman, Economics Editor
The figures prompted criticism of the Government's handling of the economy by the opposition parties, while business representative organisations warned of their impact on economic competitiveness. Analysts predicted inflation would rise above 4 per cent later in the year.
"Next month's consumer price index (CPI) will be another knife-edge affair. This time the question is, will it be 4.0 per cent or 4.1 per cent, with much depending on whether or not food prices continue to ease," Ulster Bank Chief economist Pat McArdle said yesterday.
"The risks are still to the upside, with the cost of oil and gas set to rise again in the coming months, not to mention the prospect of more interest rate rises," Alan McQuaid of Bloxham stockbrokers said.
Oil prices reached a record high yesterday, with the price of benchmark crude oil rising above $76 (€60) a barrel on world markets.
"Inflation remains a serious concern for business and consumers and the situation may well get worse before it gets better," Ibec senior economist Fergal O'Brien said yesterday. Small business lobby Isme blamed the latest inflation trend on Government ineptitude. "As business continues to suffer, the Government continues to sit idly by and allows the fiasco to unfold," Isme chief executive Mark Fielding said.
"Bertie Ahern said he anticipated inflation to remain high and to increase in coming months, an admission that seems defeatist in the extreme," Dan Boyle, Green party finance spokesman said.
"It's time to start ringing alarm bells about the economy. The Government is adding fuel to the economic fire by stoking up spending, which means consumers and small businesses are bearing the burnt of rising prices," Fine Gael spokesman Richard Bruton said.
Analysts have attributed the latest surge in inflation to the impact of interest rate rises in December and March as well as food price increases during the spring. Energy costs grew faster than any other category, rising annually by 13.8 per cent in June, despite having moderated in recent months.
Public service prices continued to make significant contributions to inflation, with education and health service costs rising by 4.7 per cent and 4.5 per cent, respectively.
Analysts said June's inflation rate had benefited from the delay in passing on last June's interests rate increase to consumers, as well as from a decline in food prices that month, and predicted that further increases were likely.
