Ireland: Mortgage rise and fuel bills push inflation back up to 5%

The Government was last night urged to intervene to curb spiraling price rises as the annual inflation rate moved back up to 5% last month. Consumers are once again under growing pressure as higher mortgage repayments and rises in air fares and petrol prices have helped push inflation to more than double the European average. Opposition parties accused the Government of being unable to control rising public service costs in areas directly under its control while the Irish Congress of Trade Unions repeated its call for an increase in mortgage interest relief and a cut in VAT. Business groups also attacked the latest inflation hike and warned of job losses and an erosion of competitiveness if soaring costs were not tackled. New Central Statistics figures show inflation has now climbed back up to 5% for the first time since April.

According to the CSO's latest Consumer Price Index, inflation went up by 0.3% last month - the same increase it recorded this time last year but double the rate recorded in 2005. The main drivers of inflation in the past year were housing, water, electricity, gas and other fuels which soared by 21%. Other increases included alcohol and tobacco, up 5.6%, with education, restaurant and hotel costs increasing by more than 4%. There was some good news as costs for clothing and footwear, furnishings, household equipment and routine household maintenance all fell due to traditional summer sales.

When compared to the Eurozone, Ireland’s inflation rate is running at double the European average. Inflation comparisons between 27 EU member countries show Ireland in 20th place, with only Slovenia, Romania, Lithuania, Bulgaria, Estonia, Hungary and Latvia doing worse. Irish inflation is now well ahead of price increases in the rest of the Eurozone, even though these countries are facing the same pressures.

Fine Gael said that with the cost of mortgages up 43.7% in the last 12 months, many home-owners were feeling the strain, while a further interest rate hike has been signaled by the European Central Bank. “Irish inflation is now well ahead of price increases in the rest of the Eurozone, even though these countries are facing the same pressures of interest rate increases and rising fuel prices,” said Fine Gael’s finance spokesman Richard Bruton. Fine Gael blamed inflation in government-regulated sectors - housing, health and communications - for the gulf between Ireland and the rest of Europe. “Fianna Fail is failing to keep down costs in sectors it controls directly,” said Bruton. “It is also failing to create a competitive environment in sectors where it plays a role as the regulator.”

Labor also blamed the Government for the latest inflation hike which, it said, could no longer be dismissed as a “blip”. “I would now urge the social partners to seek an urgent meeting to consider what steps to take to deal with a level of inflation that was clearly never envisaged when the Towards 2016 agreement was concluded,” said Labor’s consumer affairs spokesperson Kathleen Lynch. Small business group ISME attacked the latest increase and warned of job losses and eroded competitiveness unless a concerted plan was put in place to tackle costs. ISME chief executive Mark Fielding said the sector was sick and tired of the “waffle and excuses” used by official sources in an attempt to explain why Irish inflation was more than double that of the EU. (independent.ie)