The June Consumer Price Index shows little change in inflation. The overall inflation rate remained at +2.7%, the level recorded in June, while our measure of core inflation, excluding energy products and mortgage interests, fell slightly to +0.5%.
Our conclusion from May remains valid.
The measure of core inflation used here accounts for around 85% of the total index so those who are suffering from rising prices are:
- those with standard rate mortgages with mortgage interest in the CPI (weighting 6.66%) up 24.1% on the year (we can also expect a further increase in ECB linked tracker mortgages over the coming weeks), and
- those who purchase a lot of fuel with energy prices in the CPI (weighting 7.77%) up 11.6% on the year. These are particularly drivers, as petrol and diesel make up about 50% of the energy subgroup and are up 13.8% on the year. See here. The other half of the energy sub-group (electricity, gas, liquid and solid fuels) is also rising up 6.8% on the year.
So somebody who has a standard variable rate mortgage and drives a lot is facing significant price increases compared to 12 months ago. Outside of these particular cases the average inflation rate is quite low with the other 85% of the index rising only 0.5% on the year.
One small detail item deserves mention.
ReplyDeleteThe CPI chart 8. Catagory 8-Communications.
Ireland and UK show annual increases of approx 4.0% while Germany and France have decreases of approx 2.0%.
As most of the postal cost are payroll related, it is difficult to see why Ireland should be so out of sync with Europe.
The answere of course is probably profit maximising by the postal/telecoms companies.