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Austerity is driving up (some) consumer prices

New figures from the CSO show rents, education costs and utility bills climbing despite slow overall price growth.

Image: Shutterstock

LATEST FIGURES FROM the Central Statistics Office show austerity policies are driving up goods prices, according to one analyst.

Commenting on price statistics released this morning, Cantor Fitzgerald analyst Fiona Hayes said that the biggest price increases in the last year “relate to austerity-driven price hikes for public services and hikes excise duties”.

She pointed to the fact that the biggest price jumps over the last 12 months have been for education (4.5%), and alcohol and tobacco (3.7%).

Overall, the price paid for goods by consumers continues to grow slowly, with inflation showing no signs of accelerating beyond its current sluggish level of 0.3% in the year.

Prices in fact dropped by 0.2% last month, although Hayes attributed this to seasonal declines associated with summer sales. Clothing and footwear show no signs of reversing recent price drops, with a fall of 3.6% over the last year and 7% during July alone.

Private rents are continuing their upward march, with latest figures from the Central Statistics Office indicating an 8.2% jump over the last 12 months.

However, the cost of servicing mortgage interest payments continues to tumble, falling by 9.3% in the year and by 0.9% during July.

Utility bills are also on the way up, with electricity costs climbing by 3.7% compared to last year, with gas also up by 2.7%.

Industrial production nosedive

The CSO also released new figures on industrial production, showing a decrease of 18.2% in June when compared to the previous month.

The volatility of the index was largely driven by a 27.4% reduction in output from the high-tech ‘modern’ sector, including the chemical and pharmaceutical industry, which fell by 35.7%.

Hayes said that the expiry of key pharmaceutical patents has been “an important driver of weakness and volatility in the sector’s output over the last number of years”, although the majority of the off-patent impact is now thought to have “washed through” the system.

Davy analyst David McNamara said that he expects industry will make a strong positive contribution to the economy this quarter despite the so-called ‘patent cliff’.

He added that the prospect of broader inflationary movement in the economy “remains weak”, but said some upward pressure on prices could be brought to bear by a general improvement in the economic outlook.

Read: Young people might have to delay flying the nest due to rising rents>

Read: Inflation up slightly in June>

About the author:

Jack Horgan-Jones

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