DUBLIN: Declining oil prices lowered Ireland’s inflation rate to -0.6 per cent in January, its lowest level in more than 4 years.
This is the second month in a row that the Consumer Price Index (CPI) has fallen into negative territory, raising fresh fears that the Irish economy is now entering a period of dangerous deflation.
Negative price growth can, in theory, make it more difficult to service debt and encourage consumers to defer spending to the detriment of the retail economy.
However, several experts insisted the current bout of deflation was being driven by global trends in oil prices and interest rates, both of which are positive for the consumer.
The latest figures suggest the average basket of goods and services in the Irish economy was 0.6 per cent cheaper in January than a year previously.
The main driver behind the change was a 6.6 per cent fall in transport costs due to lower petrol and diesel prices.
Prices for household furnishings and routine house maintenance also fell by 2.7 per cent, while the cost of food and non-alcoholic drinks dropped by 2.4 per cent.
