Business

Inflation rises to 4.6% in December

Annual increase in CPI index driven by cost of mortgage interest repayments as well as rising prices for restaurants, hotels and recreational activities

Looking at 2023 as a whole, the average annual rate of inflation was 6.3 per cent. This compares with 7.8 per cent in 2022, and just 2.4 per cent in 2021. Photograph: Noel Bennett

Ellen O’Regan
Tue Jan 16 2024 - 12:50

Inflation rose to 4.6 per cent in December, up from 3.9 per cent in the previous month, continuing to be driven by increased costs of mortgage repayments, as well as rising prices for restaurants, hotels and recreational activities.

The latest consumer price index (CPI) published by the Central Statistics Office (CSO) on Tuesday shows that prices rose by 4.6 per cent in the year to December, and increased by 0.7 per cent between November and December.

In an indication that rising inflation may be losing momentum, December was the second consecutive month since September 2021, that the annual growth in the CPI has been below 5 per cent.

A flash estimate for the harmonised index of consumer prices (HICP) published by the CSO earlier this month put annual inflation to December at 3.2 per cent, up from 2.5 per cent in November.

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The CSO noted that CPI and HICP inflation figures diverge primarily due to the fact that the consumer price index includes mortgage interest repayments, while the HICP does not.

The increased cost of mortgage interest repayments was one of the main drivers of CPI inflation, rising by 36.7 per cent in the 12 months to December. When mortgage interest is excluded from the CPI, annual inflation in December reached 3.6 per cent.

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Overall, housing, water, electricity and fuel costs rose by 5.2 per cent in the year to December, although the general increase in the division was offset somewhat by a 12.1 per cent fall in prices for electricity, gas, liquid fuels (home heating oil) and coal.

Prices rose across all divisions of the CPI in the 12 months to December, with other notable increases in prices for recreation and culture (+10.3 per cent), restaurants and hotels (+6.6 per cent), and food and non-alcoholic beverages (+5.6 per cent).

In the month between November and December, the divisions with the largest growth were recreation and culture (+2.5 per cent) and furnishings, household equipment and routine household maintenance (+1.4 per cent), while prices decreased marginally for alcoholic beverages and tobacco (-0.5 per cent) and communications (-0.1 per cent).

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Looking at 2023 as a whole, the average annual rate of inflation was 6.3 per cent. This compares with 7.8 per cent in 2022, and just 2.4 per cent in 2021.

In December, the average price for an 800g white sliced pan was €1.64, down 2 cent on a year previously, while the price of 2 litres of full-fat milk also fell by 8 cent to €2.18, and the price of a pound of butter fell by 9 cent to €3.75.

Meanwhile, the price of a 2.5kg bag of potatoes rose by 36 cent to €3.74, the cost of a 500g packet of spaghetti increased by 13 cent to €1.49, and the price of a kilogram of Irish cheddar rose by 21 cent to €10.70.

The average price of a pint of stout last month was €5.64, up 44 cent in a year, while the price of a pint of lager was €6.06, up 33 cent.

Ellen O'Regan

Ellen O’Regan

Ellen O’Regan is an Irish Times journalist.

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