Irish inflation climbs to 6.3% in August as mortgage interest rates soar

The Irish economy experienced a significant rise in inflation, reaching 6.3% in August. This increase was primarily caused by a surge of over 50% in mortgage interest repayment rates over the past year.

The official gauge for inflation in the Republic, known as the consumer price index (CPI), has gone up and surpassed last year's increase of 5.8 per cent that was detected in July.

The Central Statistics Office (CSO) has released the CPI figures for August, stating that this month marks the 23rd consecutive month where the yearly rise has been no less than 5%.

During the period of August 2022 to August 2023, there was a significant rise in prices, especially for necessities such as housing, water, electricity, gas, and other fuels. This increase amounted to a total of 17.3 percent.

According to the CSO, there has been a noteworthy increase in this classification, primarily because of the surge in expenses related to mortgage interest repayments. These repayments have risen by 51.3% in August 2023, over the past 12 months.

As central banks strive to control inflation, Irish mortgage rates have surged to the highest they have been in ten years lately. Lenders have been transferring a series of European Central Bank interest rate hikes to customers.

The increase was also impacted by the yearly hikes in the cost of electricity and gas, which have gone up by 25.1% and 36.6% respectively over the last year.

According to recent information, the expenses for leisure and entertainment have increased by 12.9% from August last year. This surge was primarily due to the soaring prices of package vacations, which saw a massive hike of 57.9%. Additionally, there has been a rise of 13% in the cost of pet-related products and services.

In the period up until August, there were only two sectors that saw a decrease in prices: education and transportation.

The expenses for education have gone down by 6.3%, as a result of the decrease in costs for tertiary education. In addition, the charges relating to transportation have decreased by 2%. This decline in transportation costs is mainly due to the fact that the price of fuel has decreased, and there is a reduction in the cost of services for private vehicles and transportation services for passengers by bus or coach.

In the span of a month from July to August, the cost of living went up by 0.7 percent. In contrast, there was only a 0.2 percent increase in August 2022.

Clothing and footwear experienced the most significant surge in prices during the month, with a rise of 4.2%. Meanwhile, housing, water, electricity, gas, and other fuels also saw an increase in prices, accounting for 1.7% of the overall increase.

The sole divisions which experienced a decline in prices within the past month were recreation and culture (-0.8%) and communications (-0.1%).

According to an analysis, the expense of an 800g cut bread packet has gone up by 4 pennies during the previous year. While a 2-liter container of full-fat milk has experienced a price increment of 11 pennies within a year. Additionally, the mean value of Irish cheddar cheese have seen an elevation of 63 pennies per kilogram and butter per pound rose by 19 pennies.

In the span of a year, the price of 500 grams of spaghetti has increased by 16 cents, whereas a 2.5 kilogram sack of potatoes now costs an extra 11 cents.

Gerry McCormack, the deputy general secretary of Siptu, stated that the increase in prices would cause immense pressure and worry for employees and households who are already grappling with the existing high cost of living.