The annual rate of inflation was unchanged in September, although increased clothing and footwear costs and higher household bills pushed prices up on the previous month.
Figures released by the Central Statistics Office (CSO) showed the September consumer price index was 0.4 per cent higher than in August. But annual inflation, at 4.6 per cent, was unchanged.
A 2.6 per cent increase in the cost of clothing and footwear as prices rose after the summer sales was one of the main factors behind the monthly rise. The cost of services also rose, increasing by 1.3 per cent, as higher health insurance charges, the increased television licence fee and the rising cost of package holidays fed through to the index, the CSO said.
Helping subdue inflation was a 0.3 per cent drop in transport, fuel and light costs as the price of petrol and home-heating oil fell due to lower world energy prices.
The price of oil and the introduction of the euro will be the two main factors influencing inflation over the coming months, economists say. While oil prices will be at the mercy of developments on the world stage, the coming weeks should tell whether Irish retailers take advantage of the single currency to raise prices.
Analysts believe the impact will be limited, however. "As regards the euro changeover, we think the overall impact on inflation will be fairly small as it was with decimalisation back in 1971," says Mr Alan McQuaid, economist at Bloxham Stockbrokers. "Whatever about the short term, on a longer-term basis, euro-zone inflation in general will tend to be curbed by the effect of greater transparency and competition," he said.
Assuming stable oil prices, Mr McQuaid forecasts an average inflation rate of 3 per cent next year compared with an expected rate of 4.8 per cent this year.
Another factor likely to depress the consumer price index is the impact of lower interest rates on the cost of housing following the recent rate reductions by the European Central Bank (ECB).
Meanwhile, on an EU-harmonised basis, prices rose by 0.3 per cent in September and were up by 3.8 per cent year-on-year. The latest comparable figures from the EU are for August and show Irish inflation at 3.7 per cent, the fourth highest in the EU, behind the Netherlands, Greece and Portugal and just ahead of Spain at 3.6 per cent.
