This morning, Ireland’s Central Statistics Office (CSO) has released its inflation figures for February 2013. The monthly headline Consumer Price Index (CPI) increased by 0.8% compared to January 2013, but is still only up a modest 1.1% year-on-year. February’s results mirror those of December, November, October and September, and continue a subdued annual inflation trend seen in recent months compared with the 2%+ that pertained before January 2011.
Housing has stopped being the biggest driver of annual inflation, mostly because mortgage costs have been declining – by 7.0% in the past year, as ECB rate cuts and greater scrutiny of variable mortgage interest rates take effect. Just a few months ago, mortgage interest was rising by 20% per annum, and as mortgage interest costs account for over 5% of the basket which measures inflation, the impact on inflation was substantial.
Energy costs in homes on the other hand, which account for over 5% of the total basket examined by the CSO, have risen by 6.9% in the past 12 months, mostly driven by the 9% price hikes at the ESB, and in October 2012 at Bord Gais.
Elsewhere, private rents rose by 0.2% in the month of February 2013 – this after a 0.1% increase in January 2013 but bigger increases in previous months: 0.7% in December, 0.6% in November, 0.7% in October and 0.9% in September 2012. Over the past year, such rents are up by 2.2% according to the CSO – there is some small rounding in the figures above which show 2.4%.
It seems that in our financial crisis, the big correction in rent took place in 2009 with a 19% maximum decline, compared to a decline of just 1.4% for all of 2010. Since the start of 2011 there has been a 6.9% increase (mostly recorded in February and October 2011 and February and September/October/November 2012).
Rent assistance levels have not been affected by the recent Budget 2013, neither the rates nor contribution have changed.
What I’d like to see is a breakdown of the renters.
Take Galway for instance. The market there is dependent on the student population at NUI.Galway and GMIT. Yes you have the hospitals and the other large employers but their numbers are fixed. Granted Galway is relatively closed, but how different are the other markets really.