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News : Irish Economy Last Updated: Jul 12, 2013 - 7:13 AM


Irish Economy 2013: Consumer Prices up 0.7% in 12 months to June
By Finfacts Team
Jul 11, 2013 - 2:54 PM

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Irish Economy 2013: Consumer Prices in June, as measured by the CPI, increased by 0.1% in the month. This compares to a decrease of 0.2% recorded in June of last year. Prices on average, as measured by the CPI, were 0.7% higher in June compared with June 2012, according to the CSO today.

The most notable changes in the year were increases in Education (+4.8%), Alcoholic Beverages & Tobacco (+4.4%) and Miscellaneous Goods & Services (+1.8%). There were decreases in Furnishings, Household Equipment & Routine Household Maintenance(-3.2%), Communications(-2.4%) and Transport(-1.5%).

The most significant monthly price changes were increases in Transport(+0.6%), Restaurants & Hotels(+0.5%) and Housing, Water, Electricity, Gas & Other Fuels (+0.4%). There were decreases in Clothing & Footwear(-2.7%) and Furnishings, Household Equipment & Routine Household Maintenance (-0.5%).

The main factors contributing to the monthly change were as follows:

  • Transport rose mainly due to an increase in airfares;
  • Restaurants & Hotels rose mainly due to an increase in the price of hotel accommodation;
  • Housing, Water, Electricity, Gas & Other Fuels increased mainly due to higher rents;
  • Clothing & Footwear and Furnishings, Household Equipment & Routine Household Maintenance fell due to the traditional summer sales.

CPI sub-indices: The annual rate of inflation for Services was 1.6% in the year to June, while Goods decreased by 0.6%. Services, excluding mortgage interest repayments, increased by 2.6% in the year since June 2012.

The CPI excluding tobacco for June increased by 0.1% in the month and was up by 0.6% in the year. The CPI excluding energy products rose by 0.2% in the month and increased by 0.7% in the year. The CPI excluding mortgage interest increased by 0.1% in the month and rose by 1.1% in the year.

European Union comparison: In May 2013,  the HICP (harmonised index of consumer prices) in the Euro Area increased by 1.4% in the year and by 1.6% for the EU. The highest rate in the EU was in Romania (+4.4%) followed by Estonia (+3.6%) and the Netherlands (+3.1%). Greece had the lowest rate of inflation in the EU, based on the HICP, at -0.3%. In Ireland, the HICP showed an annual increase of 0.5%.

Juliet Tennent, economist at Goodbody, comments:

Irish inflation remains below the euro-area average with little underlying price pressures

Inflation remains tame
The annual rate of inflation ticked up slightly in June but remains below 1% for the fourth month in a row. The CPI rose to 0.7% yoy from 0.4% yoy in May while the HICP (ex-mortgage costs) increased to 0.7% yoy from 0.5% yoy previously. This sees Irish inflation remain significantly below that of the euro-area where the flash estimate for June rose to 1.6% yoy from 1.4%. With little domestic inflationary pressure we expect the benign price environment to continue.

Goods continue to experience deflation
Inflation is confined to the services sector which saw prices increase by 1.6% yoy in June while Goods remained in deflationary territory with prices falling by 0.6% yoy. In line with recent trends the most significant price rises continue to be in areas impacted by increases in VAT and decreases in Government spending like Alcohol and Tobacco (+4.4% yoy), Education (+4.8% yoy) and Health Insurance (+12% yoy). There is also inflation in the Food sector, where prices have increased by 1.9% yoy. Transport fell by 1.5% yoy, driven by a fall in the cost of fuel (-3%) which was partially offset by an increase in air fares which rose 5.4% yoy. The upward trend in private rents continued with rents increasing by 7% yoy."

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