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high costs Food prices follow fuel and utility bills as inflation soars to highest in over 20 years

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Food prices are beginning to surge on the back of soaring fuel, utilities and airfare costs.

Consumers have been warned that the inflation rate is set to keep rising in the coming months.

It hit 7pc in April, a high not seen for 22 years.

Central Bank of Ireland Governor Gabriel Makhlouf said the surge in inflation meant there was a need to increase interest rates, a move that would pile more pressure on thousands of homeowners.

In a speech to business bosses in Dublin, Mr Makhlouf said: “We have reached the point where we on the European Central Bank’s Governing Council need to act.”

Financial experts are expecting three European interest rate rises in the coming months, a move that could cost variable and tracker-rate mortgage holders about €1,000 more a year to service their home loans.

The inflation index released by the Central Statistics Office confirms prices for home energy, petrol and diesel are surging.

And there is evidence that hefty price rises are now being imposed on goods and services that have not seen increases up to now.

Surging price rises are delivering a huge hit to disposable incomes as wage rises are not keeping pace with the inflation rate.

Consumer prices increased by 9.3pc in April .

The April CSO numbers show double-digit increases in flour and pasta and sharp rises in milk and meat prices.

Overall, food prices are up 3.5pc in the past year.

CSO statistician Colin Cotter said the national average price for a large (800g) white sliced pan was up 12.9c in the year to March.

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The same size brown sliced pan was up 22.2c in the year.

The national average price of a take-home 50cl can of lager at €2.16 was up 32c on average from March last year.

Beer prices are up 12pc. A take-home 70cl bottle of vodka at €23.90 was up €3.18.

The CSO said diesel prices are up 40pc in the past year, with petrol up 24pc.

Statisticians recorded diesel prices at €1.95 per litre and petrol at €1.93 per litre.

This means diesel rose 61.3c a litre, with petrol up by 50.4c per litre, in the year to March.

There was a huge 93pc rise in the cost of airfares as overseas travel has opened up again after the Covid restrictions.

The war in Ukraine has seen electricity rise 29pc in the past year with gas up 50.5pc.

Home-heating oil costs have shot up by 90pc, while solid fuels, which includes wood, peat and coal, are 25pc more expensive than a year ago.

Rents were up 9.3pc in the past year.

Economists at the Economic and Social Research Institute expect annual inflation to peak at between 8pc and 8.5pc this summer, before falling.

Economist with KBC Bank Austin Hughes said inflation was likely to edge a little higher in coming months.

He said a rate of 8pc would represent a high not seen in four decades.

“Stubbornly high energy costs and ongoing global supply bottlenecks because of Covid-related shutdowns in China mean any easing is likely to be quite slow,” Mr Hughes said.

And a likely further pick-up in food prices, coupled with the prospect of rising interest rates, mean cost-of-living pressures will get worse this year, he said.

The price rises between March and April were caused by increased price pressures in areas such as clothing, likely reflecting strong sterling, and increased transport costs.

Supply chain issues prompted a 12.7pc annual increase in car prices, while Easter travel may have contributed to a 32pc increase in the month of April in airfares that left them 93pc higher than April last year, Mr Hughes said.


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