Irish inflation turns negative in April

Consumer prices fell on an annual basis for the first time in nine months in April, according to the Central Statistics Office (CSO).

The CSO’s latest consumer price index shows prices fell by 0.4 per cent in the 12 months to April, dragged down by cheaper air fares and lower car insurance premiums.

The CSO said most notable changes were in transport where average prices were down 4 per cent in annual terms, with the price of airline tickets down by nearly 29 per cent.

The cost of miscellaneous goods and services, which includes motor insurance, was also down by 3.8 per cent.

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The figures show motor insurance was down by nearly 14 per cent in the 12 months to April.

Conversely the price of housing, water, electricity, gas and other fuels rose by 4.8 per cent while the price of alcoholic beverages and tobacco rose on average by 3 per cent.

Despite the strength of the Irish economy inflationary pressure has remained weak.

Interest rates

Data last week showed euro area inflation unexpectedly slipped in April to 1.2 per cent.There is now a growing perception that a rise in euro zone interest rates will now come much later than anticipated due to slowing growth momentum and subdued inflation.

Separately, sterling fell against the euro on Thursday after the Bank of England held interest rates steady at 0.5 per cent as expected but cut its growth and inflation projections for this year and next.

Bank of England governor Mark Carney told reporters the bank’s earlier guidance on tighter policy had been conditioned on February inflation projections but the economy had not fulfilled those conditions.

He said the bank wanted to see a growth pick-up in coming months before raising borrowing costs.

His comments triggered a sterling slump against the euro, with the single currency rising one per cent to 88.35 pence.