The annual inflation rate jumped to 6.8% in October - up from 6.2% in September, according to the latest figures from the Central Statistics Office today. Inflation had been stalled at 6.2% since last July. The surge in the inflation figure with less than four weeks to go to the budget is bad news for the Government.
The rate was steady at 6.2% between July and September and was expected to increase in October because of the impact of higher oil prices resulting from the collapse of the Middle East peace process. But the jump to 6.8% was higher than was generally expected.
A number of factors were responsible for the increase. A 13.4% increase in the cost of home heating oil last month alone helped push the overall cost of fuel and light up 4.5%. Higher mortgage rates combined with rising rents also pushed the cost of the housing component of the CPI up by 1.3%.
There were also significant increases in the cost of transportation, services, and clothing and footwear.
The fact that inflation has risen so high is likely to add weight to the arguments about delivering large tax cuts in December's budget. Finance Minister Charlie McCreevy is a firm advocate of the view that large scale tax cuts are the key to reducing inflation.
However, many economists are fearful that tax cuts could push too much money into the economy and aggravate the problems of inflation.
