Inflation climbed by just 0.5% last year

The cost of living increased slightly last month compared with December 2012 but prices were unchanged compared to November, figures released by the Central Statistics Office yesterday have shown.

According to the latest data, the Consumer Price Index (CPI) was up just 0.2 per cent in December when compared with the same month last year while the rate of inflation over the course of 2013 was put at 0.5 per cent.

This compares to a rate of inflation of 1.7 per cent for 2012 and 2.6 per cent for 2011. The largest annual increases last year were recorded in January and February when prices on average rose by 1.2 per cent and 1.1 per cent compared to the previous January and February respectively.

Alcohol and tobacco prices climbed by 5.7 per cent in 2013 while education costs increased by 4.5 per cent, a rise which can be explained by increases in the cost of third-level education.

Prices in hotels and restaurants climbed by 2.8 per cent, an increase which was fuelled by higher-priced alcohol.

The cost of clothing and footwear fell by 4 per cent in 2013 while furnishings and household equipment declined by 3.7 per cent and communication costs fell by 2.4 per cent. While the cost of public transport increased significantly late last year, with increases on trains and both urban and national buses climbing, transport prices as a whole fell back by 1.1 per cent as a result of lower priced petrol and diesel.

The Irish Small and Medium Enterprises Association (ISME) warned that while the top line inflation figures were low key costs including waste, energy and local charges were too high and it said that unless they were addressed at a governmental level, economic recovery would be delayed.

It said an inflation rate of 0.2 per cent concealed the burden of increasing state-influenced business costs being borne by SMEs.

"Companies are continuously attempting to reduce their costs to compete but are hampered by increases introduced by the State, undermining Government policy of an economy based on export driven growth," said ISME chief executive Mark Fielding. "These state-influenced business costs, which must be factored into their pricing strategies are simply too high. This unfairly disadvantages Irish SMEs when it comes to competing in the international export market. Unless these costs are reviewed and reduced to at least match our competitors, the Governments aspirations for an export led recovery will be unattainable."