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Irish Consumer Prices in June, as measured by the CPI, fell
by 0.1% in the month. This compares to a decrease of 0.3% recorded in June of
last year. As a result, prices on average, as measured by the CPI, were 0.9%
lower in June compared with June 2009.
The Central Statistics Office (CSO) reported today that EU
Harmonised Index of Consumer Prices (HICP) decreased by 0.1% in the month,
compared with no change recorded in June of last year. As a result, prices on
average, as measured by the HICP, were 2.0% lower in June compared with June
2009.
The most notable changes in the year were decreases in
Clothing & Footwear (-11.2%), Food & Non-Alcoholic Beverages (-5.4%)
and Furnishings, Household Equipment & Routine Household Maintenance
(-4.6%). There were increases in Education (+9.1%), Housing, Water,
Electricity, Gas &Other Fuels (+5.2%) and Transport (+2.9%). The
annual rate of inflation for Services was 0.9% in the year to June, while Goods
decreased by 3.1%.
The most significant monthly price changes were decreases in
Clothing & Footwear (-1.1%), Transport (-0.5%) and Alcoholic
Beverages & Tobacco (-0.3%). There was an increase in Miscellaneous Goods
& Services (+0.4%).
The main factors contributing to the monthly change were as
follows:
Clothing & Footwear
fell due to sales.
Transport fell due to
decreases in petrol and diesel prices.
Alcoholic Beverages &
Tobacco fell due to decreases in the price of wine sold in off licences and
supermarkets.
Miscellaneous Goods
&Services rose mainly due to an increase in the cost of home insurance.
The CPI excluding tobacco index for June decreased by 0.1% in
the month and was down by 1.0% in the year. The CPI excluding energy products
fell by 0.1% in the month and decreased by 1.9% in the year. The CPI excluding
mortgage interest decreased by 0.1% in the month and was down by 1.8% in the
year.
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IBEC senior economist Fergal O'Brien
said: 'It now
looks like we will be back to positive observations in the consumer price index
during the Autumn but prices will fall by about 1% on average in 2010. By the
end of the year the actual price level in the Irish economy will still be about
6% below where it was two years ago."
Davy chief economist, Rossa White,
commented:
Deflation ongoing, but slowing
The CPI and HICP both fell 0.1%
month-on-month in June. That was bang in line with our forecasts submitted
to the Bloomberg and Reuters surveys.
It meant that the annual rate of
deflation was -0.9% in May for the CPI and -2.0% for the HICP.
Only three sub-indices of the 12
in the CPI posted inflation month-on-month in June and even at that, it was
marginal: food (+0.1%), health (+0.1%) and miscellaneous (personal)
goods/services (+0.4%).
The price of transport (-0.5%,
thanks to lower petrol/ diesel prices), clothing/footwear (-1.1%, thanks to
summer sales) and off-sales alcohol (-0.3%) fell sharply.
In summary, deflation has slowed
to about -1% annualised. But monthly price drops will continue through 2010
and into 2011 at that kind of pace.
HICP (Harmonised Index of Consumer Prices) down 2%
We forecast that total consumer
spending, including services as well as retail, will grow 1% in volume in
2010. Meanwhile, this year's average for the HICP may finish 1.9% lower than
for 2009 (CPI -1.3%).
