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ISEQ firm- Focus on Irish inflation

Friday, October 12 08:56:03

The ISEQ is unchanged this morning at 3,244 as European markets focus on earnings results from some of the largest businesses in Europe. At home the fall in the rate of inflation was good news and is examined this morning by NCB Stockbrokers:

CPI data released by the CSO yesterday show that the headline annual rate of inflation moderated to 1.6pc in September, from the previous month's 2.0pc reading. Given the minimal (-0.1pc mom) net change in the CPI relative to August's out-turn, the fall had more to do with base effects than any recent developments. On the EU's preferred HICP measure, annual inflation stood at 2.4pc in September.

Within the data we see that clothing and footwear prices experienced the biggest monthly change, rising 2.9pc mom mainly due to a further recovery in prices after the end of the summer sales. Alcoholic beverages and tobacco (+0.6pc mom) rose due to increased off-trade prices, while transport declined 1.1pc mom as lower airfares more than offset higher petrol and diesel prices.

Comparing September's CPI reading with year-earlier levels reveals that the components seeing the highest annual increase in prices are: education (+9.6pc yoy), where higher third level fees are influencing this outcome; transport (+7.9pc yoy), where a more than 12pc yoy increase in both petrol and diesel prices are pushing that component higher; and 'miscellaneous goods and services' (+5.1pc yoy), where an 8.5pc yoy uplift in insurance prices is the main driver of that component's increase.

Looking ahead, announced increases in mortgage costs, energy prices and public transport fares will place upward pressure on overall consumer prices over the coming months. This pressure, allied to the further tax increases planned for December's Budget, will act as a headwind to consumer spending growth for some time to come according to NCB Stockbrokers