Prices for consumer goods inch up 0.2% in twelve months

Prices for consumer goods in Ireland were up by a marginal 0.2 per cent in the twelve months to September.

However, on a monthly basis, consumer prices dipped back into deflationary territory with transport and communications costs causing the biggest drag.

September prices, as measured by the Central Statistics Office (CSO), dropped by 0.6 per cent compared to the August.

The monthly decline was led by a 3.8 per cent drop in transport costs and a 2.3 per cent dip in communications prices. Housing costs, meanwhile, increased on the back of higher rents by 0.6 per cent while clothing and footwear prices jumped by 3.2 per cent.

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The dip in transport costs was attributed to a fall in air fares but it was partially offset by higher petrol and diesel prices.

The 12-month picture is more positive with the price of consumer goods increasing, albeit at a lesser rate than the 0.4 per cent increase in the year to August. Again, housing prices increased but so too did the cost of restaurants and hotels - primarily due to higher prices for alcoholic drinks and hotel accommodation.

On the year, there was a 4.8 per cent dip in clothing and footwear prices as sales dropped and a 4.1 per cent fall in furnishing and household equipment costs.

Merrion Capital analyst Alan McQuaid said this month’s report was “weaker than expected”.

“Despite strong Irish economic growth, there is little sign of sustained pressure on the prices front, which appears to be the same story across the Eurozone, suggesting that the European Central Bank will be in no hurry to tighten monetary policy,” he said.

“Although the annual inflation rate is set to pick up between now and year-end, inflationary pressures in Ireland as measured by the headline consumer price index should in general stay reasonably-well contained for the immediate future.”