The domestic economic focus this morning turns to the consumer price index for November. Inflationary pressures continue to remain fairly subdued. Prices were 0.2% lower in the month in October, pushing Ireland’s headline annual inflation rate down to just 0.1% as against 0.2% in both September and August, and the lowest rate since July 2010. <p>
Meanwhile, the HICP rate, the measure used for EU comparative purposes, also posted a monthly decrease of 0.2% in October, and showed an annual fall of 0.1%, the first negative reading since December 2010. <p>
Domestic inflationary pressures in Ireland are likely to remain depressed for some time to come. Continued weak consumer demand will in general put downward pressure on prices in the months ahead. The residential property tax has hit disposable incomes hard, which in turn is weighing negatively on spending power. And it should be remembered that the full-year effect of the property tax has yet to be felt. <p>
<b>As regards the Irish inflation outlook, it is still hard to see the average headline rate for 2013 being any higher than 0.6% as against 1.7% and 2.6% in 2012 and 2011 respectively. And as things currently stand, inflation may average less than 1.0% again in 2014. <p>
For November, we are looking for flat prices in the month, giving an annual inflation rate of 0.5%.
<p><h5>Alan McQuaid</h5>
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