Eamon Quinn: Inflation likely to haunt Ireland like it's the 1970s
Economists Inflation Further Many To Run For Say Has Ireland,
It's no secret that consumer prices — already running at their highest for two decades — have much further to go as households face paying further hikes in their winter utility bills. But the risk of widespread inflation taking hold from everything from food to booze to rental costs will haunt Ireland through 2022.
The drivers of Irish inflation are the same around the world. Amid huge global shortages, large increases in wholesale gas and crude oil prices this winter are being passed on to households.
And the rebound in the global economy and its supply chain snarl-ups is making matters worse.
On the day that CSO figures showed prices rose 5.5% in December at their fastest pace since April 2001, Britain's inflation at 5.4% and Canada's of 4.8% both set new 30-year records.
Germany this month posted consumer inflation of 5.3%, the highest since the summer of 1992 when its national team was defeated by Denmark at the European football championships. And spare a thought for the almost 6% rate in South Africa and inflation of 15.6% in Nigeria.
There is also the conflict over Russian troops on Ukraine's border and Moscow's clash with Nato. Energy traders spend a good part of their day watching the daily updates of east-west gas flows across the pipelines that connect major gas producer Russia via Gazprom with Poland and Germany, and which ultimately helps decide the cost of generating power on the Irish grid too.
Then there is crude oil, which has risen 70% this year.
It's no surprise that a whole host of energy-related prices in Ireland have spiked. The price hike in home heating oil, up by almost 53% from last winter, caught the eye of Kieran McQuinn, the economics professor at the Economic and Social Research Institute.
He said that much of the hefty price increases painfully detailed in the CSO release were "distributional" in that they affect certain households more than others. In this case, households relying on oil to heat their homes will be the worst hit.
But the longer energy prices continue to rise, the greater the risk that general inflation takes hold.
There is also the age-old Irish problem of housing costs, that may come to define 2022 as the dangerous year of inflation.
The CSO inflation index indirectly captures housing costs, but includes rents, which have now climbed an astonishing 8.4% since December 2021.
To put it into perspective, Britain's much lower rental inflation of 1.8% was reported as a further worrying sign of inflation over there.