Dáil Éireann Debate, Tuesday - 24 April 2018
124. Deputy Michael McGrath asked the Minister for Finance if the consumer price index has been broken down by composition (details supplied); if the price changes have been tracked along those lines; the result of the conclusion of such analysis; and if he will make a statement on the matter. [17705/18]
View answerInflation in Ireland has been subdued for several years. For example, on a Harmonised Index of Consumer Prices (HICP) basis, 2017 was the fifth consecutive year of inflation below 1 per cent. This phenomenon is not restricted to Ireland. Low inflation has been a feature of advanced economies in recent years. However, in 2017, inflation on a HICP basis across the euro area accelerated to 1.5 per cent, from 0.2 per cent in 2016.
This acceleration did not occur in Ireland, with inflation on a HICP basis averaging just 0.3 per cent in 2017. The divergence between inflation in the euro area and Ireland can in part be attributed to the impact of euro-sterling appreciation on consumer prices in Ireland. In turn this reflects the importance of the UK as a source of imports of consumer products.
While average inflation is low, that masks considerable variation across the components which make up the index. For example, the price of goods is declining. In 2017, goods inflation averaged -2.1 per cent. The decline in goods is driven by declining prices for non-energy industrial goods and food. In contrast, energy prices increased on average by 4 per cent last year.
While goods prices on the whole are falling, those for services are increasing. For example, services inflation averaged 2.5 per cent last year. One important factor driving the increase in services inflation is strong growth in rent prices. Rent inflation averaged 6.7 per cent last year, a moderation from the 8.7 per cent increase in 2016.
While inflation is not categorised by the CSO or Eurostat into discretionary or non-discretionary elements, both institutions publish detailed inflation data at a sub-component level according to the United Nations (UN) Classification of Individual Consumption by Purpose (COICOP).
