This morning, Ireland’s Central Statistics Office (CSO) has released its inflation figures for December 2012. The monthly headline Consumer Price Index (CPI) rose by 0.1% compared to November 2012, and is up just 1.2% year-on-year. December’s results mirror those of November, October and September and continue a subdued 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 14.6% 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 nearly 6% of the basket which measures inflation, the impact on inflation was substantial. However there might be a spike next month when the January 2013 figures are made available as mortgage interest relief has now been curtailed or withdrawn for first time buyers.
Energy costs in homes on the other hand, which account for over 5% of the total basket examined by the CSO, have risen by 7% 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 0.7% in the month of December 2012 – this after a 0.6% increase in November 2012, 0.7% monthly increase in October 2012 and a 0.9% increase in September 2012, a flat month in August and three months of declines in April-June followed by a small increase in July – and over the past year, such rents are up by 3.5% according to the CSO – there is some small rounding in the figures above which show 3.6%.
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 6.7% 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.
