A fall in Britain's inflation rate will ease the pressure on certain sectors of the Northern Ireland economy, but there are strong indicators that an economic slowdown is ahead, industry observers have warned. New figures from the UK Office for National Statistics showed yesterday that the underlying rate of inflation fell 0.2 per cent to 2.2 per cent in July.
A significant 10 per cent fall in the price of fresh foods and a slight fall in the price of petrol were two of the key factors that contributed to a larger-than-expected drop in inflation levels.
According to the Office for National Statistics, the headline rate of inflation, which includes mortgage payments, was down 0.3 per cent on the figure for June, at 1.6 per cent. The underlying rate of inflation fell by 0.6 per cent from a two-year high of 2.4 per cent, to 2.2 per cent in July.
Mr Philip McDonagh, chief economist with PricewaterhouseCoopers in Northern Ireland, said the fall in inflation would help ease the cost of living in the North.
"Northern Ireland is very exposed to what happens in the rest of the UK because of our obvious economic links. There are definitely signs of a slowdown in the UK as a whole and the slowdown in the economy in the Republic will also have an impact on Northern Ireland.
"At the same time, the Northern Ireland economy is insulated by the public sector and it tends to cushion us against economic downturns so that we have a softer landing," Mr McDonagh said.
Mr John Stringer, chief executive of the Northern Ireland Chamber of Commerce, said no one in the North expects to fully escape the global slowdown.
"We are generally upbeat because we believe Northern Ireland is still in good economic shape, but we are beginning to look over our shoulder - there are certain economic indicators which suggest Northern Ireland may suffer more of an impact than it has done to date," Mr Stringer added.
Meanwhile, Sir Reg Empey, The Northern Ireland Minister for Enterprise, Trade and Investment, has refuted claims that the North's economic strategy has been held back by political developments.
"Speculation that the development and implementation of economic policy is being delayed by political developments is simply untrue. The facts speak for themselves; the creation of a new single economic agency, Invest Northern Ireland, is right on track with the recent appointment of the Shadow Board, and the search is presently on for a chief executive to lead this body," Sir Reg said.
"In terms of the extension of the gas industry in Northern Ireland, I am fully aware of the tight time frames involved. My officials are working closely with the many parties involved to ensure that issues relating to the gas industry can be brought back to the Executive for further consideration as soon as possible."
