Rents and mortgage interest costs continue to climb
Rents and mortgage costs are hugely outpacing the overall rate of inflation — even as the ECB keeps a tight lid on interest rates, according to official figures.
The CSO figures show that prices across its weighted basket of 51,000 goods and services that make up the Consumer Price Index fell back in July and increased by a modest 0.5% from July 2018 — and down from June’s annual inflation rate of 1.1%.
However, all types of housing costs, including landlord rents and the costs of bank interest payments on monthly mortgage payments, have risen by many times the rate of inflation across the economy.
Amid the housing crisis, private landlord rents continued their ascent — rising by a significant 0.3% in the month and climbing 5.6% from July last year, according to the figures.
Local authority rents were unchanged in the month but were nonetheless 5.8% more expensive in the year.
And despite the expectations that the ECB will cut some of its key interest rates as early as next month, the interest charged by Irish banks on their mortgages also rose by a significant 0.4% in July, and up by just under 3% from July last year.
After many years when insurers hiked the costs of car insurance, the figures show that premium costs were unchanged last month and were almost 5% cheaper compared with July 2018.
Overall, higher electricity and gas prices helped push up the annual rate of inflation, while declines in communications prices and the costs of household goods and clothing weighed on the index.
Economist Alan McQuaid said the latest inflation figures were weaker than expected and price pressures were likely to remain muted “for the time being, all things considered”.
“Despite strong economic growth, there is as yet little sign of sustained pressure on the prices front, and this is the same story across the eurozone,” he said, noting the ECB is widely expected to cut its deposit rate when it next gathers next month.
“Ireland’s average inflation rate was 0.5% in 2018, marginally up from 0.4% in 2017. An average inflation rate of 0.6% is now envisaged for 2019,” said Mr McQuaid.
