Irish prices are rising and inflation hits a 22-year high of 6.7 per cent on fuel and housing costs

Irish prices rose 6.7 percent in the year to March on rising transport, housing and energy costs as the war in Ukraine drags on.

This is the largest rise in the consumer price index in more than two decades.

The rise of more than a point is the largest since November 2000, when inflation was 7 percent, the Central Statistics Office said.

Annual inflation in February was 5.6 percent according to the CPI and 5.7 percent according to the EU’s harmonized index.

Transportation costs rose 18.7 percent in March, with housing, water, electricity, gas and other fuels up 17.4 percent. Alcohol and tobacco prices rose 7 percent.

Only “Other” goods and services and the price of clothing and education fell slightly in the month compared to March 2021.

Consumer prices rose 1.9 percent between February 2022 and March 2022, the largest monthly increase since the index began in 1997, the CSO said.

Irish prices rose 6.9 percent in March, according to the EU’s Harmonized Index released last week. Prices in the 19-strong eurozone rose 7.5 percent.

Austin Hughes, chief economist at KBC Ireland, predicts inflation could rise above 7 per cent in April, putting pressure on the government to release a mini-budget.

The Taoiseach ruled out a mini-budget earlier this week.

The central bank this week lowered its growth forecasts for the Irish economy due to rising inflation and the war in Ukraine.

She now expects the domestic economy to expand by 4.8 percent in 2022, instead of the 7 percent forecast just three months ago.

The bank expects consumer prices to rise an average of 6.5 percent over the course of 2022, up from a previous forecast of 4.5 percent.

The Economic and Social Research Institute (ESRI) expects inflation to hover around 8.5 percent this summer and average 6.7 percent in 2022.

ESRI has also warned that growing job vacancies could push up wages, with average wage growth reaching 4.8 percent in 2021. So far, however, earnings are unlikely to outpace inflation.

Data from jobs site Indeed shows the labor market is buoyant, with Irish job postings up 60 per cent on April 1 compared to pre-pandemic levels in February 2020.

“With the cost of living rising, employers are preparing for growing wage demands,” says Indeed economist Pawel Adrjan. “It remains to be seen to what extent workers will be compensated for the rising cost of living.”

CSO data earlier this week showed the jobless rate edged up to 5.5 percent in March, from 5.2 percent in February when pandemic unemployment benefits ended.

The central bank forecasts that unemployment will fall to 5 percent by 2024.

A survey of 152 Chief Financial Officers by consultancy EY shows that 57 per cent of Ireland-based companies believe talent will be one of the top growth challenges this year.

However, despite inflation and the impact of the war in Ukraine, CFOs are still forecasting an average growth rate of 12 percent.

Growth is driven by people and talent, according to a majority (36 percent) of respondents. Irish prices are rising and inflation hits a 22-year high of 6.7 per cent on fuel and housing costs

Fry Electronics Team

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