Big increases in food prices and mortgage repayments pushed the annual rate of inflation up by a further 0.9 of a percentage point in February to 5.3 per cent.
The rate of price increases in the Irish economy had begun to fall late last year and the February figures will be a disappointment to the Government although most analysts suggest inflation will begin to decline sharply again for the rest of 2001.
At 5.3 per cent, it was slightly better than most economists had expected with the end of the price freeze on alcohol and postponed increased in Voluntary Health Insurance (VHI) premium increases taking effect in February.
However, within the euro zone, Irish inflation is no longer soaring ahead of other EU member states.
According to euro-zone inflation figures, which exclude mortgage and health insurance costs, inflation in Portugal, the Netherlands and Spain is ahead of Ireland. Using this measure, Irish inflation has increased by 3.9 per cent on a year-on-year basis compared with 4.9 per cent in Portugal and the Netherlands and 4 per cent in Spain.
The biggest component of the Consumer Price Index which measures Irish inflation was housing with increases in mortgage interest rates contributing 1.77 of the 5.3 per cent year-on-year increase.
Food prices have also risen sharply, mainly as a result of the high proportion of goods imported from the UK which have become more expensive because of the strength of sterling. Over the 12 months, food prices increased by 5.5 per cent and made up 1.29 per cent of the total increase.
Despite the upward movement in inflation last month, most economists suggest that by yearend inflation could move down towards around 4 per cent. Falling energy prices, the likelihood of lower interest rates and a recovery in the euro form the basis for these forecasts.
:quality(70)/cloudfront-eu-central-1.images.arcpublishing.com/irishtimes/VR3765MFOBH2NMV2QNICYDF67M.png)