Business News

Inflation eases as motor insurance and rents soar

Motor insurance costs and private rents have soared in the past year, even as the prices of many other goods and services have fallen sharply, the latest inflation figures show.

The CSO said that its consumer price index showed that prices across the economy rose only slightly last month and had fallen in the year to June. The CPI rose 0.3% in June, but fell 0.1% from a year earlier.

However, the figures showed the declines in the overall index mask sharp rises in car insurance —up almost 16% in the past year.

Insurance brokers warn that though the CSO figures show that car insurance costs were unchanged in the latest month that there are more hikes in car and business insurance on the way.

“There are very significant price increases in private car insurance for consumers in the pipeline. Those increases are because of the the claims’ experience of a number of insurers at the moment. There is no sign of those pressures abating,” said Patrick Quinlan, manging director of broker Patrick Quinlan, which specialises in SME insurance and for apartment blocs.

“I would warn consumers that insurers are preparing for more increases. They should shop around because insurers have a mix of business,” he said.

Mr Quinlan said young drivers, in particular, were being hit with large hikes in their premiums this year.

The CSO said that there were price decreases in the past year for clothing and footwear, transport, food and non-alcoholic beverages and furnishings, household equipment and routine household maintenance.

There were however price increases for education, communications, restaurants and hotels, and for the catch-all category of housing, water, electricity, and gas and other fuels.

Private rents, in particular, showed large increases. Private landlords increased rents by 0.9% in June, and rents are now 9.3% higher than a year earlier.

Local authority rents are 1.4% lower than in June 2014.

Mortgage interest costs also fell, as lenders trim their variable and fixed-rate mortgages. Mortgages interest costs dropped 2.5% since May, and are now 9.9% lower than June 2014.

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