Inflation picked up in Nov ember with consumer prices running at 2.1 per cent ahead of the same time last year, compared with 1.5 per cent at the end of October.
On an EU-harmonised basis consumer prices were up 0.2 per cent in November and 3 per cent over the year. That puts Ireland at the top of the EU league and more than double the euro-zone average of 1.4 per cent in October.
The 0.2 per cent rise in Nov ember was mostly due to increases in the prices of clothing and footwear and durable household goods such as washing machines.
In November, clothing and footwear for men and women rose 0.9 per cent while durable household goods rose 0.3 per cent.
There were also large increases in food in November, particularly beef, meals out, soft drinks, biscuits and cakes. But prices of lamb, poultry, potatoes and fresh fruit all fell.
Housing continued to fall, reflecting the reduction in interest rates, with costs declining by 0.7 per cent while fuel and light prices fell 0.2 per cent.
Services inflation continued to soar with a monthly rise of 0.4 per cent bringing the annual figure to about 5.8 per cent. This includes rising prices for education and medical fees as well as entertainment. However, as the number of new hotels coming on stream continues to grow, hotel costs are actually falling.
Over the year transport costs have also increased substantially and are up 5.4 per cent. Fuel and light is up 4.9 per cent over the year while alcoholic drink is up 3.8 per cent.
The biggest restraining influence on consumer prices this year has been housing, which fell 14 per cent, and clothing and footwear which are still 7.3 per cent lower than last year.
According to Mr Colin Hunt, chief economist at Goodbody Stockbrokers, the fall in housing costs is now over and will feed into even higher inflation figures in December and January when he expects price rises to peak.
He added that the rise in November was smaller than he had been expecting. "This proves that strong domestic demand generates increased imports rather than generating price pressures," he said.
He added that inflation was likely to average 2.1 per cent this year. It would also move higher as last year's mortgage rate cuts feed out of the figures and the impact of the Budget's 50p rise on a packet of cigarettes is felt.
According to Mr Hunt, inflation will peak at above 3 per cent in the next two months and then moderate as the mathematical impact of the elimination of last year's mortgage rate cuts falls off.
The euro's falling value against sterling can also be expected to have some impact and this may be seen in the price rise in clothing and footwear while the strong yen may possibly be affecting the rising prices of durable household goods.
However, according to Mr Hunt, sterling has been in the ascendancy for three years and that has still not fed through to Irish inflation in any meaningful way.
