Consumer prices fall by 0.1% in year to April

The cost of car insurance continues to soar, with an annual rise of 34.5 %

The CSO said that falling transport costs were mainly due to lower petrol and diesel prices.   (Photograph: Yui Mok/PA Wire)

The CSO said that falling transport costs were mainly due to lower petrol and diesel prices. (Photograph: Yui Mok/PA Wire)

 

Fiona Reddan

Lower oil and petrol prices continue to hold down inflation in Ireland, with prices on average slightly lower in April 2016 than a year earlier, figures from the Central Statistics Office show. The most notable increases continue to be recorded in motor insurance, up 34.5 per cent on an annual basis, with another sharp monthly increase in April.

According to the CSO, prices were 0.1 per cent lower in April 2016 compared with a year ago, as measured by the Consumer Price Index (CPI). Decreases over the year were recorded in the cost of transport (-4.9 per cent); household equipment and routine household maintenance (-2.6 per cent); and clothing & footwear (-2.3 per cent) , helping to push the index down. Price drops were also recorded in food and non-alcoholic beverages (-1.0 per cent).

The CSO said that falling transport costs were mainly due to lower petrol and diesel prices, a reduction in the price of cars and a fall in air fares which was partially offset by an increase in bus and taxi fares.

Price increases were also recorded, the most notable of which was for miscellaneous goods & services (+4.5 per cent) due to rising motor, home and health insurance premiums. Overall insurance costs rose 11.8 per cent year on year but the main rise was motor insurance, which showed a 3.4 per cent monthly increase, bringing the annual rate of increase to 34.5 per cent , up from 32.6 per cent the previous month.

Education costs also increased (+3.8 percent), as did restaurants & hotels (+2 per cent) and alcoholic beverages & tobacco (+1.7 per cent).

On a monthly basis, prices increased by 0.2 per cent in April, and the most significant monthly price changes were increases in alcoholic beverages and tobacco (+0.9 per cent) and restaurants and hotels (+0.7 per cent). There were decreases in furnishings, household equipment & routine household maintenance (-0.5 per cent) and communications (-0.4 per cent).

Alan McQuaid, economist with Merrion Stockbrokers, now expects inflation to advance by just 0.2 per cent on average this year, with the services sector the main source of upward pressure. This compares with an inflation rate of -0.3 per cent in 2015, and 0.2 per cent in 2014.

“Despite the booming Irish economy, inflationary pressures as measured by the CPI are in our view likely to remain fairly well contained in the immediate future, mainly because of low food and energy prices. However, the cost of services like insurance and education look set to continue to rise,” he said,adding that oil prices will be “critical” in determining the headline inflation outlook.

Prices on average, as measured by the EU Harmonised Index of Consumer Prices (HICP), decreased by 0.2 per cent compared with April 2015, but increased by 0.3 per cent in the month.