Inflation rises to 0.5% on back of jump in fuel costs

Inflation has risen to its highest level in almost four years on the back of rising fuel costs and a pick-up in hotel and restaurant prices.

The latest consumer price index (CPI) suggests the average basket of goods and services in the Republic was 0.5 per cent higher in February than 12 months previously.

Inflation has now risen for four consecutive months. Apart from July last year, the last time the annual inflation rate hit 0.5 per cent was 2013.

The most notable change in the year was a 3.6 per cent increase in transport costs. Within this, the figures show the price of diesel has risen by 20 per cent in 12 months while the price of petrol is up 13. 3 per cent.

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There were also increases in restaurants and hotels (2.1 per cent) and miscellaneous goods and services, including motor insurance, which also rose 2.1 per cent.

Car insurance

The annual rise in motor car insurance was 4.6 per cent in February, albeit this was down from 6.3 per cent in January, 8.8 per cent in December and 11.7 per cent in November.

Conversely there were decreases in household furnishings (-5.2 per cent), clothing and footwear (-3.8 per cent); food and non-alcoholic beverages (-2.6 per cent); and clothing and footwear (-2.5 per cent).

“Despite the robust Irish economy, inflationary pressures as measured by the headline CPI should in our view remain fairly well contained in the immediate future,” Merrion analyst Alan McQuaid said.

“That said, the cost of services like insurance and education are likely to remain elevated,” he said.

"Oil prices will be critical in determining the headline inflation outlook over the next 12 months or so, but they remain volatile and hard to predict given the uncertainty over potential Opec output cuts," Mr McQuaid said.