Caution despite living costs easing
Business chiefs have warned against complacency as the cost of living eased last month, claiming business costs continue to rise.
The Irish Small and Medium Enterprises (Isme) Association said increasing commercial rates, rents, transport, labour and energy costs would cause companies to go to the wall.
Official figures from the Central Statistics Office revealed the inflation rate stood at 2.2% last month, down from the 2.7% recorded in July. But Isme warned action was still needed to tackle the high cost of doing business.
Chief executive Mark Fielding said: "The reduction in inflation should not be a signal for complacency and jumped on by spokespersons to indicate that all is well.
"In the week where it has been confirmed that our world competitiveness position has remained at a disappointing 29th, it is imperative that a root and branch review is carried out to address our cost structure, particularly the impact on indigenous businesses. Unless appropriate action is taken, the future of thousands of companies and the individuals they employ remains in jeopardy."
The most notable price increases in the year were housing, water and fuel costs up 7.2%, health up 3.4% and transport increasing by 3.2%. Miscellaneous goods and services, such as hairdressing, personal goods, childcare, insurance, weddings and funerals, increased by 6.2%.
Business body Ibec said the falling inflation rate and the European Central Bank's (ECB) decision to keep interest rates on hold bring welcome relief to consumers.
Fergal O'Brien, Ibec chief economist, said "Encouragingly, Ireland's inflation rate, as measured by the EU's harmonised index of consumer prices, remains the lowest in the eurozone, ensuring that Ireland's competitiveness relative to trading partners continues to improve.
"Falling inflation together with the ECB's decision to halt interest rate increases, and the possible reversal of recent hikes, brings welcome relief to Irish households. The Government must now do its part and set out in the forthcoming four-year plan how budgetary decisions will affect consumers' disposable incomes."
Ibec predicted inflation would average 2.5% this year and rise no further than 1.5% in 2012.