Pressures on inflation are 'benign'
Analysts have said that inflation pressures in the Irish economy remain relatively benign, despite a rise to 1.7% year-on-year (yoy) in May, from 1.4% last month.
Goodbody Stockbrokers have said Ireland's 2.1% inflation rate remains below the euro-area average of 2.5% for the second successive month, as compared to May 2003 when inflation in Ireland was running at more than double the euro-area average.
Because of this, they believe price stability has been restored.
They report that restaurant and hotel price increases have had the most significant impact, contributing 0.62% to the 1.7% annual inflation rate.
Transport costs have raised inflation by 0.46% with increased fuel costs, 3.0% on petrol and 2.6% on diesel, being the main factor.
The price of alcohol was flat in May and up 1.2% yoy. However, they say price increases recently announced by the industry could impact on prices in the short term.
Goodbody are forecasting that the inflation rate will continue to rise as the year progresses with energy prices adding to the rate. Their average inflation forecast for the year remains at 2.6%.
