Thursday, February 20, 2014

Core inflation at 0.9%

Today’s CPI release from the CSO shows that overall consumer price annual inflation remained at 0.2% in January.  The monthly drop of 0.5% matched the 0.5% drop recorded in January last year.

If we strip out energy products and mortgage interest (equal to around 15 per cent of the overall index) we get a measure of ‘core’ inflation.  This rose slightly in January but remains below 1%.

Core Inflation January 2014

Upward pressure on Irish inflation is coming from services.  Services excluding mortgage interest are up 3.0% in the year.  Services are:

Electricity, gas, telecommunications, alcoholic beverages consumed on licensed premises, meals out, housing, rent, mortgage interest repayments, insurance, public transport, entertainment and recreation, education, household services and miscellaneous services including childcare, social protection, package holidays and other services.

As we examined before most of the price increases in these sectors can be explained by excise duty increases (alcohol), regulated price increases (electricity, gas, public transport), property taxes (housing), lower tax relief and higher charges (health insurance) and higher fees (education).

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