Inflation is a measure of the average rate of increase in the prices paid by consumers for goods and services, the official measure being the Consumer Price Index.

Every month some 200 "pricers" from the Central Statistics Office visit a fixed panel of shops, supermarkets and other retail and service outlets throughout the State, noting the prices of a wide variety of goods and services. Some 43,000 prices covering 985 different goods and services are collected every month in 82 cities, towns and villages, in an attempt to measure changes over time in the prices of the typical purchases of an average household.

These prices are then compared to the prices collected the previous month. The basket of goods and services on which the CPI is based, comprises 560 items within 10 commodity groups - food, alcohol, tobacco, clothing and footwear, fuel and light, housing, durable household goods, other goods, transport and services and related expenditure. The cost of mortgage repayments, home insurance, motor tax and insurance, hairdressing and taxi fares are included in the inflation figure.

Housing, transport and fuel and light showed the biggest price rises in June with increases of 1.9 per cent (annual increase: 6.1 per cent), 1.2 per cent (9.3 per cent) and 0.8 per cent (8.2 per cent). The increases were driven by mortgage interest rate and local authority rent rises, and the rise in the cost of heating oil and petrol.

The June figures show a 0.5 per cent rise in food prices to bring the annual increase to 3.1 per cent, down from 3.2 per cent in May. Meals out, pork and bacon, breakfast cereals, fresh fruit and vegetables, yoghurt and eggs were all more expensive.

Alcoholic drink prices were up 0.4 per cent with an unchanged annual percentage rise of 5 per cent which added 0.67 per cent to the overall CPI. Tobacco prices were up 0.3 per cent in June, giving an annual rise of 17.5 per cent and contributing 0.90 per cent to the CPI.