Falling cost of oil pushes prices down by 0.5% in February

Retail prices fell by 0.5 per cent in the year to February 2015, but on a monthly basis, prices actually rose, increasing by 0.6 per cent on January.

According to the consumer price index (CPI), prepared by the Central Statistics Office (CSO), declining transport costs drove the index down in the 12 months to February 2015. This is the third consecutive month of decline on an annualised basis.

On an annual basis, transport costs saw the biggest decrease, as falling oil prices pushed prices down by 7 per cent, while clothing and footwear (-3%); and food and non-alcoholic beverages (-2.9%), which benefited from lower prices across a range of products such as meat, vegetables and bread, were also in decline.

On the way up was the cost of education (+4.9%); miscellaneous goods & services (+2.3%), due to higher health and motor insurance premiums; and restaurants & hotels (+1.8%), due to higher prices for hotel accomodation and alcoholic drinks .

On a monthly basis however, significant monthly price changes were increases in clothing & footwear (+6.1%), as post January sales, prices rose once more. The cost of furnishings, household equipment & routine household maintenance also rose (+1.5%). There were decreases in alcoholic beverages & tobacco (-0.8%) and food & non-alcoholic beverages (-0.7%).

Alan McQuaid, economist with Merrion Stockbrokers, said that domestic inflationary pressures in Ireland are likely to remain fairly well contained for some time to come.

“Indeed, with global oil prices still very weak, Ireland’s annual inflation rate is set to remain in negative territory in the near-term. However, we do expect some uptick as the year goes on, with a strengthening labour market/falling unemployment likely prompting a gradual rise in wages, and the depreciating euro pushing up import costs,” he said, adding that Ireland is not on the brink of “dangerous deflation”.

EU

Across the EU, prices on average, as measured by the EU Harmonised Index of Consumer Prices (HICP), decreased by 0.4 per cent compared with February 2014.

The most notable changes in the year were decreases in transport (-7.7%), food & non-alcoholic beverages (-2.9%), clothing & footwear (-2.9%) and furnishings, household equipment & routine household maintenance (-2.8%).

There were increases in housing, water, electricity, Gas & Other Fuels (+5.6%), education (+4.9%), restaurants & hotels (+1.9%) and alcoholic beverages & tobacco (+1.2%).

On a monthly basis, prices rose by 0.6 per cent when compared with January.