Living costs up as inflation rises
The cost of living has been hit by the first annual increase since the start of 2009, official figures have revealed.
Mortgage interest hikes, increasing bills for education and rising telecoms charges all led to a 0.2% rise in inflation. Up until August, year-on-year consumer prices had fallen steadily over the past 19 months.
The Central Statistics Office basket of goods test showed fashion stores increasing prices for clothes and footwear as the summer sales ended last month and transport charges also edged up slightly as airfares and car rental costs went up. The cost of eating and drinking came down over the year with cheaper wine, non-alcoholic drinks, meat and vegetables.
Ibec, Irish business lobby group, warned prices in some sectors were still too high and needed to fall back in line with our competitors.
Economist Reetta Suonpera said: "Prices are now rising again, but the spare capacity in the economy will ensure that inflation in coming years will be fairly moderate. Price levels are likely to remain below the 2008 peak until 2013."
Isme, the Irish Small and Medium Enterprises Association, said the future of thousands of businesses lay in the hands of Government and called for state-managed rates to be cut.
Chief executive Mark Fielding said: "There needs to be recognition by Government that cost competitiveness is crucial to the future of business and the future of the economy. The private sector has done its bit by cutting costs to the bone, just to remain in business, but these companies continue to be hammered by increases in state imposed costs."
Avine McNally, director of the Small Firms Association, said: "The most worrying aspect is that, for the main part, inflation is being driven by increases in public utility costs, such as education, housing, water, electricity, gas and transport, and these costs are daily input costs for businesses."
She added: "When costs are passed on to the rest of the economy, competitiveness and jobs are lost and businesses close."
Dan McLaughlin, of Bank of Ireland's economic research division, said the annual rise in inflation was driven by higher mortgage interest costs, as banks sought to pass on some of their higher costs of funding.