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News : Irish Economy Last Updated: Jan 16, 2014 - 3:58 PM


Irish Economy: Annual consumer inflation at 0.2% in December; Goods prices fell
By Finfacts Team
Jan 16, 2014 - 3:55 PM

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Irish Economy: Prices on average, as measured by the CPI (consumer price index), were 0.2% higher in December compared with December 2012, according to the CSO today. The price of goods fell by 0.9% and the most notable changes in the year were increases in Alcoholic Beverages & Tobacco (+5.7%), Education (+4.5%) and Restaurants & Hotels (+2.8%). There were decreases in Clothing & Footwear (-4.0%),Furnishings, Household Equipment & Routine Household Maintenance(-3.7%), Communications (-2.4%), Transport (-1.1%) and Food & Non-Alcoholic Beverages (-1.1%). 

Consumer Prices in December, as measured by the CPI, remained unchanged during the month. This compares to an increase of 0.1% recorded in December of last year. The most significant monthly price changes were increases in Transport (+0.6%) and Health (+0.6%).  There were decreases in Alcoholic Beverages & Tobacco (-0.7%) and Clothing & Footwear (-0.7%).

Contributions to the overall CPI – annual change

Table 17 shows the contribution of each 2-digit COICOP1 division to the overall change in the CPI. A detailed breakdown of the individual components of each of the 12 COICOP divisions is presented in Tables 4 to 15.

The divisions which caused the largest upward contribution to the CPI in the year were Restaurants & Hotels(+0.41%), Alcoholic Beverages & Tobacco (+0.31%), Education (+0.12%) and Housing, Water, Electricity, Gas & Other Fuels (+0.10%).

The divisions which caused the largest downward contribution to the CPI in the year were Clothing & Footwear(-0.20%), Furnishings, Household Equipment & Routine Household Maintenance (-0.18%), Transport(-0.15%) and Food & Non-Alcoholic Beverages (-0.13%).

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

  • Restaurants & Hotels increased mainly due to higher prices for alcohol consumed on licensed premises.
  • Alcoholic Beverages & Tobacco rose due to higher prices for alcohol sold in off licences and supermarkets and higher tobacco prices.
  • Education increased primarily due to a rise in third level education costs.
  • Housing, Water, Electricity, Gas & Other Fuels rose mainly due to higher rents and an increase in the cost of electricity and solid fuels, which was partially offset by lower mortgage interest repayments.
  • Clothing & Footwear fell due to clothing and footwear sales.
  • Furnishings, Household Equipment & Routine Household Maintenance decreased mainly due to furniture and furnishings sales.
  • Transport fell mainly due to decreases in petrol, diesel and motor car prices.
  • Food & Non-Alcoholic Beverages decreased due to lower prices across a range of products.

Contributions to the overall CPI – monthly change

The divisions which caused the largest upward contribution to the CPI in the month were Transport (+0.08%) and Restaurants & Hotels (+0.06%).

The divisions which caused the largest downward contribution to the CPI in the month were Housing, Water, Electricity, Gas & Other Fuels (-0.05%), Recreation & Culture (-0.04%), Alcoholic Beverages & Tobacco(-0.04%) and Clothing & Footwear (-0.04%).

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

  • Transport increased mainly due to a rise in airfares, bus fares, rail fares and higher petrol and diesel prices.
  • Restaurants & Hotels rose mainly due to an increase in the price of hotel accommodation and food served in restaurants, cafés etc.
  • Housing, Water, Electricity, Gas & Other Fuels decreased mainly due to lower mortgage interest repayments, which was partially offset by higher rents and an increase in the cost of home heating oil.
  • Recreation & Culture fell mainly due to decreases in the cost of games, toys and hobbies.
  • Alcoholic Beverages & Tobacco decreased due to lower prices for alcohol sold in off licences and supermarkets.
  • Clothing & Footwear fell mainly due to sales.

CPI sub-indices

The annual rate of inflation for Services was 2.0% in the year to December, while Goods decreased by 1.9%. Services, excluding mortgage interest repayments, increased by 3.0% in the year since December 2012.

The CPI excluding tobacco for December remained unchanged in the month and rose by 0.1% in the year. The CPI excluding energy products fell by 0.1% in the month and increased by 0.5% in the year. The CPI excluding mortgage interest increased by 0.1% in the month and was up by 0.7% in the year.

Harmonised Index of Consumer Prices

Prices on average, as measured by the HICP, increased by 0.4% compared with December 2012.

The most notable changes in the year were increases in Alcoholic Beverages & Tobacco (+5.6%), Housing, Water, Electricity, Gas & Other Fuels (+4.5%), Education (+4.5%) and Restaurants & Hotels (+2.7%).  There were decreases in Clothing & Footwear (-4.0%), Furnishings, Household Equipment & Routine Household Maintenance (-3.7%), Communications (-2.4%) and Transport (-2.1%). 

The EU Harmonised Index of Consumer Prices (HICP) increased by 0.1% in the month.  This compares to no change recorded in December of last year.

The most significant monthly price changes were increases in Housing, Water, Electricity, Gas & Other Fuels(+0.9%), Transport (+0.6%) and Furnishings, Household Equipment & Routine Household Maintenance(+0.5%).  There were decreases in Clothing & Footwear (-0.9%), Alcoholic Beverages & Tobacco (-0.7%) and Recreation & Culture (-0.5%). 

Consumer Price Index Annual Review - 2013

Annual average inflation in 2013 was 0.5%

This analysis compares the annual average rates of inflation for 2013 with the annual average rates of inflation for previous years.

The annual average rate of inflation in 2013 was 0.5%.  This compares to a rate of 1.7% for 2012 and 2.6% for 2011.  The largest annual price rises for the year were recorded in January 2013 and February 2013, when prices on average rose by 1.2% and 1.1% compared to the previous January and February respectively.

Largest rises recorded in Alcoholic Beverages & Tobacco and Education

Of the twelve classification divisions, six showed higher annual average inflation rates for 2013 than was the case in 2012 with six showing a lower rate of inflation.

The largest increases were recorded for Alcoholic Beverages & Tobacco (+5.2%), Education (+4.6%),Restaurants & Hotels (+2.0%) and Miscellaneous Goods & Services (+1.9%). The largest decreases were recorded for Communications (-3.7%), Furnishings, Household Equipment & Routine Household Maintenance(-3.5%) and Clothing & Footwear (-3.0%).  The remaining five divisions showed changes between +/- 1.2% for the year.

During 2013, mortgage interest repayments fell on average by 7.1% compared to a drop of 8.4% in 2012.  The price of Goods decreased on average by 0.9% while the price of Services (which includes mortgage interest) rose by 1.7%.  During 2012, the price of Goods increased on average by 1.2% while the price of Services rose by 2.0%. 

Education shows the largest price increase since 2009

Over the period 2009 to 2013, the largest increase in prices was for Education (+21.4%), Miscellaneous Goods & Services (+15.0%) and Housing, Water, Electricity, Gas & Other Fuels (+12.6%).  The largest decreases were for Clothing & Footwear (-13.9%), Furnishings, Household Equipment & Routine Household Maintenance (-11.8%) and Recreation & Culture (-3.7%).  The overall increase in the Consumer Price Index over this period was 3.8%.

HICP

Prices on average, as measured by the HICP (EU harmonised index of consumer prices) rose by 0.5% in 2013 compared to an increase of 2.0% in 2012.

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