NCB Economics: Further respite for consumers as prices fall 0.4% in November
Inflation data just released by Ireland’s Central Statistics Office (CSO) show the CPI declined by 0.4% m/m in November. The annual rate of increase in the CPI now stands at just 0.8%, its lowest level since November 2010.
Within the release, we see that the biggest contributors to the latest fall in prices were transport (-1.9% m/m), communications (-1.0% m/m) and restaurants and hotels (-0.7% m/m). Transport prices fell during the month on the back of declines in the cost of air fares (-5.1%), petrol (-3.7%) and diesel (-1.8%). Ongoing price deflation in the telecoms space was behind the fall in communications prices, while another sharp monthly decline (-5.4%, versus the -4.2% m/m drop seen in October) in the cost of accommodation services was enough to keep prices in the ‘restaurants and hotels’ segment in negative territory.
Only four of the 12 components of the CPI recorded an increase in prices during the month. Within these, the most notable rises were in the areas of housing-related costs (+0.3% m/m), where a 0.9% m/m increase in mortgage interest was recorded, and ‘Recreation & Culture’ (+0.2% m/m).
In all, with the CPI having fallen in 5 of the last 6 months, the data show further respite for Irish consumers on the prices front, which is welcome news given the domestic backdrop. Looking ahead, we would expect to see the rate of inflation pick up over the coming months on the back of the indirect tax increases flagged in last week’s Budget, rising mortgage costs and also public transport fare hikes.