The annual rate of inflation fell to its lowest level in five years in March, bringing the rise in consumer prices in line with global trends. Figures issued by the Central Statistics Office (CSO) show that the rate of inflation was 1.3 per cent last month, down from 1.7 per cent in February, and represented the seventh successive monthly fall, Siobhán Creaton, Finance Correspondent
In the month of March, consumer prices increased by 0.4 of a percentage point compared to an increase of 0.8 of a percentage point in March 2003. The figures show that the price of goods fell by 0.2 of a percentage point over the past 12 months, the first time that goods prices have shown negative inflation for 11 years. The annual rate of inflation for services was 2.8 per cent.
Reacting to the figures yesterday, Fine Gael Finance spokesman Mr Richard Bruton said the fall was being driven by price reductions in the private sector while the Government has been raising the cost of utilities and local charges.
"Ireland has become a country where rip-offs are rampant. Inflation may have slowed, but it's only after six years of being ahead of most other European countries. It's time for a new legislative framework in order to protect consumers" he said.
IIB Bank chief economist Mr Austin Hughes said the March figure is likely to mark the low-point for inflation this year. Mr Hughes said the latest data has been influenced by global trends towards lower inflation during 2003, softer energy prices, lower mortgage rates, the impact of a rising exchange rate and more intense competitive pressure in a number of domestic sectors.
"It is difficult to see a similar range of forces exerting a corresponding extent of downward pressure on Irish consumer prices in coming months. In these circumstances, the annual inflation rate is likely to edge higher." Mr Hughes added that he expects a relatively modest increase in consumer prices going forward.
IBEC chief economist Mr David Croughan said the latest data reflected the fact that the Irish economy has moved away from the high inflation levels that characterised the 2002 to 2003 period. Davy Stockbrokers cautioned that it would be unwise to focus solely on the headline rate of inflation, saying the trend this year showed that consumer prices are on the increase again.
Clothing and footwear prices rose in March on the back of a recovery in prices after the end of the winter sales. Housing, water, electricity, gas and other fuels also rose with increases in mortgage interest repayments, electricity costs and local authority rents. Home-heating oil prices fell last month. Higher health and house insurance costs were partially offset by falling motor insurance costs, according to the CSO.
