Energy costs are at the heart of the latest Consumer Price Index (CPI) rise of 5.6% in the year to February 2022 up from an annual increase of 5.0% in the year to January 2022.

The Central Statistics Office disclosed that the divisions with the largest increases in the year to February were Transport (+15.4%), Housing, Water, Electricity, Gas & Other Fuels (+12.7%) and Alcoholic Beverages & Tobacco (+7.8%).

Education (-0.8%) and Miscellaneous Goods & Services (-0.6%) were the only divisions to show a decrease when compared with February 2021.

Consumer prices rose by 0.9% in the month between January and February 2022. Due to annual sales, the corresponding figure in January was a decrease of 0.4%.

CSO statistician Colin Cotter commented: "Prices have been rising on an annual basis since April 2021, with annual inflation recorded at 5% or more each month since October. The annual increase in the CPI to February 2022 is the largest observed since annual inflation also stood at 5.6% in April 2001."

In Association with

Cotter explained that the annual change in Transport costs reflects a rise in the cost of diesel (+32.5%), petrol (+30.3%) and airfares (+42.3%) compared to February 2021.

Increased energy costs are reflected in the yearly increases for electricity (up 22.4%), gas (27.8%) and home heating oil (53.7%).

Cotter added: "Looking at some staple items, the national average price for bread (large (800g) white sliced pan) was up 12.1 cent in the year to January 2022, while the same size brown sliced pan is up 17.3 cent in the year. Bananas per kg increased by 10.2 cent in the year while the average price for 2.5kg of Potatoes decreased by 22.9 cent. Spaghetti per 500g was up 9.9 cent in the year.

"The national average price of a take home 50cl can of lager at €2.17 was up 29.7 cent on average from January 2021 while a 50cl can of stout at €2.35 was up 10.1 cent.

"In January 2022, the national average price of a pint of stout in licensed premises was €4.95 while a pint of lager was €5.33. As licensed premises were closed for the CPI collection period in January 2021 due to COVID-19 restrictions, annual comparisons for the price of a pint are unavailable."

The National Average Prices are compiled together with the CPI and more details for January 2022 are available here.

Price creep

Austin Hughes, economist with KBC Bank Ireland, noted a continuing pick-up in food prices (+3.0% v 2.1% in January) that included a sharp 1.5% monthly rise in bread prices that brought the annual increase for this item to 8.0% from 4.2% in January.

“There were many other signs of broader ‘price creep’ included a faster rise in car prices (+11.5% y/y v 10.9%), airfares (+42.3% v +26.7%), private rents (+9.2% v 8.4%) and newspapers, books and stationery (+5.9% v 5.1%),” added Hughes.

Hughes expects Irish inflation to move above 6% in coming months.

“The cut in excise duties on diesel and petrol announced yesterday will shave between 0.3 and 0.4 percentage points off the headline rate but this will restrain rather than reverse the current upward momentum,” he explained.

“Deep-rooted problems in relation to energy prices and growing pressures on food prices are likely to persist and threaten to spill over into significant and more broadly based increases in living and business costs.

“Second round effects are likely to worsen further in the near term as businesses increasingly factor in larger and longer-lasting cost pressures.”

In Hughes’s view, the wider inflationary consequences of the conflict in Ukraine represent a material negative shock to the Irish economy.

“As a result, a winter of discontent in relation to living costs may turn to a spring of sustained and more substantial difficulties,” he warned.