The annual rate of inflation fell slightly in August, to 4.3% from 4.4% in July, according to the Central Statistics Office. The change was, however, due only to a rounding down of the annual figure by the CSO.
Prices increased by 0.5% in the month, the same as the increase recorded in August last year. The biggest rise of 5.8% came in the clothing and footwear category as summer sales ended. A 17.6% rise in electricity prices and higher mortgage repayments also contributed to the monthly increase.
But transport costs fell 1.6% in the month, helped by lower air fares and drops in petrol and diesel prices. Food prices also fell back, while rents dropped by 2.9%.
The figures are seen as good news for the national pay talks, where the social partners are trying to settle on new pay deal before the end of this week. But trade unions are likely to notice that the easing in inflation is only marginal and that the rate of price increases during the month of August was exactly the same as that during August of last year.
The annual rate of inflation for services was 5.3% in August, while the goods rate was 3.5%.
The rate as measured by the EU's Harmonised Index of Consumer Prices (HICP) dropped from 3.6% in July to 3.2%. This figure excludes mortgage repayments.
Inflation figures welcomed
Employers' group IBEC welcomed the fall, saying the recent fall in world commodity prices augured well for the inflationary outlook next year. Economist Fergal O'Brien said the consumer prices index should fall 'well below 3%' next year, helped by commodities and possible cuts in ECB interest rates. He added that Ireland now had one of the lowest inflation rates in the EU.
Ulster Bank economist Pat McArdle said the widespread easing in prices was linked to weakness in retail sales, with supermarkets cutting prices in response.
In a note, stockbroker Davy said monthly inflation would have dropped had it not been for higher electricity and mortgage rates. Davy said it expected average inflation to more than halve to 2% next year. Goodbody Stockbrokers also pointed to the influence of electricity prices, adding that it expected the inflation rate to dip below 3% by the end of the year.
Unions want clearer inflation trend
The head of ICTU's private sector committee has said the marginal fall in inflation will not affect the 5% annual pay claims lodged by private sector unions.
Arriving for today's session of national pay talks, Jerry Shanahan said one swallow did not make a summer and as yet there was no clear downward trend on inflation. He said the inflation figure that unions were projecting towards the end of the year was close to 5% and they were sticking with that number.
SIPTU general president Jack O'Connor said it was better that the figures were marginally down than marginally up, but it was crucial to establish what trend could be gleaned from the figures. He said that - should the trend be positive from the point of view of controlling inflation - it would be helpful from the point of view of making an agreement. ICTU general secretary David Begg described the inflation situation as steady.
