Irish inflation rate falls to 1.6% in September

CPI data just released by the CSO show that the headline annual rate of inflation moderated to 1.6% in September, from the previous month’s 2.0% reading. Given the minimal (-0.1% mom) net change in the CPI relative to August’s out-turn, the fall had more to do with base effects than any recent developments. On the EU’s preferred HICP measure, annual inflation stood at 2.4% in September.

Within the data we see that clothing and footwear prices experienced the biggest monthly change, rising 2.9% mom mainly due to a further recovery in prices after the end of the summer sales. Alcoholic beverages and tobacco (+0.6% mom) rose due to increased off-trade prices, while transport declined 1.1% mom as lower airfares more than offset higher petrol and diesel prices.

Comparing September’s CPI reading with year-earlier levels reveals that the components seeing the highest annual increase in prices are: education (+9.6% yoy), where higher third level fees are influencing this outcome; transport (+7.9% yoy), where higher petrol and diesel prices are pushing that component higher; and ‘miscellaneous goods and services’ (+5.1% yoy), where an 8.5% yoy uplift in insurance prices is the main driver of that component’s increase.

Looking ahead, announced increases in mortgage costs, energy prices and public transport fares will place upward pressure on overall consumer prices over the coming months. This pressure, allied to the further tax increases planned for December’s Budget, will act as a headwind to consumer spending growth for some time to come.


September 2012 CPI Overview
  1 month 3 month 12 month
Headline CPI -0.1% 0.4% 1.6%
   Food & Non-Alcoholic Beverages 0.1% 0.5% 0.7%
   Alcoholic Beverages & Tobacco 0.6% -0.3% 3.9%
   Clothing & Footwear 2.9% 4.1% -0.7%
   Housing, Water, Fuels -0.1% -0.6% -2.8%
   Furnishings & Household Equipment -0.3% -0.3% -2.6%
   Health -0.1% -0.2% 0.5%
   Transport -1.1% 1.8% 7.9%
   Communications -0.6% -1.4% -2.6%
   Recreation & Culture -0.2% -0.3% -1.6%
   Education 0.0% 0.0% 9.6%
   Restaurants & Hotels -0.4% 0.1% 1.0%
   Misc. Goods & Services -0.4% -0.4% 5.1%
Source: CSO      

Should you have any queries on the above, please do not hesitate to get in touch.

Philip O’Sullivan

Chief Economist

NCB Stockbrokers Limited,

3 George’s Dock, IFSC, Dublin 1

D: +353 1 611 5847 / M: +353 86 358 7674

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