The rising cost of food pushed inflation higher last month as increases in the price of bread, flour, milk, cheese and other dairy and bakery products hit consumers. Laura Slatteryreports.
The consumer price index, which measures a typical basket of goods and services, showed an annual increase of 4.8 per cent in October, up from a rate of 4.6 per cent in September, according to the Central Statistics Office.
Food prices rose by 1.4 per cent last month - the highest monthly increase since April 2001 - with the price of flour soaring 11 per cent and milk, butter and bread rising by between 7 per cent and 9 per cent.
Over 12 months, the cost of food has increased by 4.4 per cent, close to the annual rate of inflation, which has been kept high largely because of a succession of interest rate hikes by the European Central Bank (ECB) and rising energy costs.
However, with the ECB leaving interest rates on hold again yesterday, Irish inflation has "a new foe", according to Goodbody Stockbrokers.
The figures confirm that the rising global cost of raw materials - which has forced several major food manufacturers including Odlums, Batchelors and Jacob Fruitfield to announce price increases - is now being passed from retailers to shoppers.
Opposition parties and business groups attacked the Government for its inflation record, with Fine Gael finance spokesman Richard Bruton saying the rise in the price of basic necessities would put some families "under severe pressure".
However Ulster Bank chief economist Pat McArdle said the increases, though "ferocious", had applied to a limited range of food items that accounted for only 2 per cent of consumer spending.
The higher food prices were offset by a surprising fall in the price of petrol, which dropped 0.7 per cent last month to just under €1.14 a litre, despite the soaring cost of crude oil.
However, with oil prices now exceeding $98 (€66.79) per barrel, Davy stockbrokers said higher food and oil prices would push inflation higher in the short term.
Expected rises in petrol, home heating oil, solid fuels and airfares in November and December will more than cancel out next month's drop in electricity prices, according to Davy economist Rossa White.
