Irish inflation hits 10-year high as cost of transport and housing jumps

Irish inflation hit a 10-year high in August, driven by a rise in the cost of transport, housing, restaurants and hotels.

Central Statistics Office (CSO) data shows consumer prices rose by 2.8 per cent in the 12 months to the end of August, the sharpest level of price growth seen since November 2011.

The latest figures come amid a series of warnings about rising costs for businesses in several sectors.

The acceleration in prices is connected to the resumption of economic activity after lockdown, supply chain blockages, higher oil prices and Brexit.

The European Central Bank (ECB) insists it will be transitory but others argue the massive build-up of savings during lockdown combined with supply chain disruption may keep upward pressure on prices for an extended period.

According to the CSO, the sectors with the largest increases in the year were transport (+10.2 per cent), housing, water, electricity, gas and other fuels (+7.3 per cent), restaurants and hotels (+3.4 per cent) and alcoholic beverages and tobacco (+2.4 per cent)

Within the transport category, the cost of petrol and diesel rose by 12.5 per cent and 13 per cent year on year.

The cost of housing was driven up by rising rents, which increased by 4.5 per cent while the cost of mortgage interest rose 2.1 per cent.

On the downside, the price of clothing and footwear fell by 5.6 per cent while the cost of furnishings, household equipment and routine household maintenance fell by 0.5 per cent.

Prices have increased for 10 straight months, the longest sequence of monthly inflation since 2007.

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ECB decides

The European Central Bank will have to decide on Thursday whether the recovery is strong enough to warrant an imminent slowdown in monetary stimulus. Policy makers in Frankfurt are due to settle on how much bond buying the economy will need in the fourth quarter, weighing risks to the outlook such as the delta variant and supply-chain bottlenecks against data pointing to a robust rebound in the 19-nation euro region.

Their conclusion will also be based on a new set of economic projections, which are likely to confirm that the latest surge in euro-area inflation to a 10-year high is temporary – even as underlying price pressures are starting to rise. – Additional reporting: Reuters


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