Consumer prices show a slight increase last month but were also up 0.2 per cent on an annual basis, the first such rise in two years, according to Central Statistic Office figures published today.
The price rise of 0.7 per cent last August compares to an increase of 0.4 per cent recorded in August 2009.
The EU Harmonised Index of Consumer Prices (HICP) increased by 0.2 per cent in August, the same as the increase recorded in August of last year. Therefore, prices on average, as measured HICP, were 1.2 per cent lower in August compared with August 2009.
The HICP is calculated using a different sample of goods and services.
The latest statistics show consumer prices increased marginally by 0.2 per cent in the year to August compared with August 2009, the first such gain since December 2008. Stripping out mortgage interest, the index rose 0.2 per cent in the month and was down by 1 per cent in the year.
The most significant monthly price changes in the consumer price index came in clothing and footwear (+3.7 per cent); housing, water electricity, gas and other fuels (+3.5 per cent); and transport (+0.5 per cent). Offsetting this were falls in food and non-alcoholic beverages (-0.3 per cent).
The inflation in clothing and footwear is attributed to a recovery in prices after the traditional summer sales, while housing, water, electricity, gas and other fuels rose due to higher average mortgage interest repayments. Transport increases were due to a rise in air fares and car rental charges.
The food and non-alcoholic beverages sector saw lower prices across a broad range of food and non-alcoholic beverage items.
Price increases during the year were led by education costs (+9.5 per cent), housing, water, electricity, gas and other fuels prices (+7.9 per cent) and communications (+2.9 per cent).
However, there were annual falls in clothing and footwear (-8.2 per cent), furnishings, household equipment and routine household maintenance (-4 per cent ), food and non-alcoholic beverages (-3.2 per cent), and alcoholic beverages and tobacco (-3.2 per cent).
The annual rate of inflation for services was 2.3 per cent in the year to August, while goods decreased by 2.1 per cent.
The consumer price index excluding tobacco index for August increased by 0.8 per cent in the month and was up by 0.2 per cent in the year. The index excluding energy products rose by 0.9 per cent in the month and decreased by 0.4 per cent in the year.
Today's figures follow a stabilisation of consumer prices in July, when they remained unchanged from June and fell only 0.1 per cent compared with the same month last year.
Reacting to the figures, the Irish Small & Medium Enterprises Association (Isme) called on the Government to tackle State-influenced business costs that exceeded the rate of inflation.
“By any benchmark we in Ireland have higher business costs than our international competitors. Unless the Government address this vital issue, the economy will remain on continued life support,” Isme chief executive Mark Fielding said.
Echoing those sentiments, business group Ibec said prices in some sectors remain too high and needed to fall back in line with those of competitors.
"The return to inflation in the autumn was expected . . . 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, Ibec economist Reetta Suonperä said.
The Small Firms' Association (SFA) said the August figures showed Ireland was not experiencing a broadly based price deflation.
"The most worrying aspect is that, for the main part, inflation is being driven by increases in public utility costs . . . and these costs are daily input costs for businesses," SFA acting director Avine McNally said.
Alan McQuaid, economist with Bloxham Stockbrokers in Dublin, warned against assuming the threat of deflation had gone away completely.
"A rebound in some commodity prices and stabilisation of core inflation rates suggest that the immediate risk of deflation has diminished, but it remains a real threat in just about every major economy," he said.
"Economic momentum is fading in much of the world while output gaps remain large, and tighter fiscal policy will only add to the disinflationary pressures during the next year or two."
Davy analyst Aidan Corcoran said rising prices may reflect growing consumer demand but noted mortgage interest costs comprised a significant portion of the price index increase.
