Prices rise at fastest pace in almost nine years

PRICES are rising at the fastest pace in almost nine years as the economy experiences a “nasty” period of inflation.

Prices on average were 2.2pc higher in July compared with the same month last year, figures from the Central Statistics Office show.

Economists said we are now experiencing a “nasty” period of inflation due to post-pandemic shortages.

Rises in the cost of petrol and diesel and energy price hikes were largely responsible for the spike in inflation.

The rise in the cost of home heating oil, electricity and gas are reflected in the figures.

Higher rents are also a factor contributing to the rise in the consumer price index.

The CSO said restaurants and hotel costs are up due to higher prices for alcoholic drinks and food consumed in licensed premises, restaurants and cafes, and an increase in the cost of hotel accommodation.

The ending of the most recent lockdown has seen a surge in people eating and drinking outside the home, and strong demand for hotel accommodation as staycations dominate the market.

Also picked up in the data is a rise in the cost of tobacco products and higher prices for wine sold in supermarkets and off licences.

However, the cost of clothing and footwear fell due to sales.

Also coming down, by 6.6pc, was the cost of motor insurance in the year to July, the CSO said.

Insurers are benefiting from a dramatic cut in the cost of settling most personal injuries claims after judges agreed to introduce lower recommended guidelines for courts awards in these cases.

But the cost of travel insurance was up by 7.2pc in the past year, as people use their Covid certs to go abroad.

Also up is the cost of home insurance, which rose by 4.6pc in the year to July.

The cost of health insurance is up 4.1pc as the three main players have announced premium rises. Some health insurers have introduced two rises in the past six months.

The was also an increase in the cost of major household appliances.

Economist with KBC Bank Austin Hughes said the overall inflation rate of 2.2pc was the fastest rate of increase in almost nine years.

He said prices rose by 2.5pc in September 2012.

We are experiencing “the noisy and nasty phase of post-pandemic price rises”.

He blamed commodity shortages, Brexit issues, and higher costs for business in a pandemic. The hope is price rises will not last, but this may change as workers start demanding pay rises.

The European Central Bank recently indicated that it would tolerate inflation running at above 2pc for now.

Central banks have stressed that they believe the current inflationary trend to be temporary and associated with the reopening of the economy after months of pandemic restrictions.

Inflation across the euro zone was also running at 2.2pc in July, according to the European statistics agency, Eurostat.