Irish households have been warned to brace for the biggest cost of living contraction since the early 1980s, following another significant jump in the official inflation rate.
The latest figures from the Central Statistics Office (CSO) show that the annual rate of price growth in the Irish economy increased to 7% in April thanks mainly to rising energy prices , fuel and groceries.
The last time inflation was higher was in November 2000, but experts warn that the peak of the current price rise is yet to come and that inflation may reach close to 9 percent in the coming months.
The latest CSO Consumer Price Index (CPI) found a general increase in prices in the Irish economy in April.
The main drivers were power and fuel. Electricity, gas and other fuels rose more than 45 percent year on year. Within this category, electricity prices rose 28 percent, while gas prices rose more than 50 percent. Home heating oil has skyrocketed by 90 percent in just 12 months.
The cost of motoring has also risen sharply, with gasoline and diesel prices rising 24 percent and 40 percent, respectively. Airfares have increased an average of 93 percent since April last year.
The cost of food and non-alcoholic beverages has also increased by an average of 3.5% year-on-year due to higher prices in a range of products such as meat, bread and cereals, mineral waters, soft drinks, fruits and vegetables. juices and milk, cheese and eggs.
The cost of miscellaneous goods and services, one of the only categories to post a decline, fell primarily due to a reduction in auto insurance premiums.
In its latest quarterly bulletin, the Economic and Social Research Institute (ESRI) forecast that the headline rate of inflation will rise to 8.5 percent or more in the coming months, a level not seen since the early 1980s. , when the war in Ukraine aggravates the current price. pressures
The outlook for inflation “depends very much on what happens in Ukraine and the fallout for energy markets,” said ESRI’s Kieran McQuinn.
SSE Airtricity pledged Thursday to keep its energy rates stable for existing home customers who struggle the most with their bills.
“As higher international energy prices continue to affect the cost of living, this announcement provides certainty to its financially vulnerable customers for the rest of this year,” the company said.
Meanwhile, experts are also warning of possible side effects in the form of higher wage demands.
“With this level of ongoing inflation, employee wage demands seem unavoidable this year,” said Barry Whelan, CEO of Excel Recruitment.
“That said, every business sector is different: sectors that are experiencing a shortage of skilled workers, like transportation, have already seen significant wage increases; For example, our most recent salary guide showed that in 2020, the current average rate for an arctic truck driver would be €30,000, but in 2021 the range jumped to €40,000-€50,000 for arctic drivers.”
Separately, a Deloitte State of the Consumer survey found that the average planned monthly spend among consumers in the state fell by 10 percent over the past month, according to Deloitte’s latest State of the Consumer Tracker.
The survey, conducted in late April across 23 countries, also found that consumers in the Republic are 10 percent more concerned about inflation than the world average, with more than half concerned about their level of savings.
Some 1,000 Irish consumers were surveyed.
“Consumers in Ireland are notably less optimistic about their finances than the global average, with significant increases in the cost of essentials inevitably leading to a contraction in planned discretionary spending,” said Daniel Murray, partner and head of consumer spending at Deloitte Ireland.
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