New figures show consumers are back spending

Arthur Beesley, Economics Editor

New inflation figures suggest Irish consumers are going out again -- and that the battle for their money is well and truly under way in the retail world.

As the recovery picks up, data for August from the Central Statistics Office point to prices rising steadily in pubs, restaurants, hotels and cafés. Prices here were almost 4 per cent higher than at the same time last year, and it was the same for alcohol sold in supermarkets and off licences and for tobacco sales.

Similar trends were seen month-on-month, with prices 0.5 per cent higher in hotels and restaurants in August than in July. The sunshine wasn’t as evident in August as earlier in the summer, but fine weather is good for business nonetheless.

It’s a given that rising prices in discrete sectors are hardly a matter of celebration for consumers. But they do point to a certain willingness to spend - and this is positive for the overall picture.

Still, promoters of sporting events saw prices drop 2 per cent in a year where the price of tickets for attending cultural events in theatres and the like was down 8 per cent.

Consumers are also confronted with higher health and motor insurance premiums. The first full-year impact of the property tax is also being felt. This is money that consumers would rather spend elsewhere.

In other quarters of the economy, decreasing prices suggest competitive forces are at work.

A 2.6 per cent annualised dip in the price of food and non-alcoholic beverages suggests consumers are taking the benefit of the battle for business between major supermarket chains. It’s not all good, however. Farmers are in uproar at the decline in beef prices.

The figures show communications prices are down 4.6 per cent, reflecting the war for telephone dollars. At the same time, a 1.9 per cent dip in the price of furnishings and household equipment also suggests consumers are still reluctant to spend on big-ticket items.

Clothing and footwear prices are down 2 per cent year-on-year, but they rose 6 per cent in August when compared with July. Predictably enough, this is attributed to price recoveries after the summer sales. When the crisis was at its height, however, sale prices lingered well into August and beyond.