Inflation drops sharply

Figures released today show that the annual rate of inflation eased sharply in November to 2.5% from 4% in October. This is the largest reduction since monthly records began. According to the Central Statistics Office, the overall cost of living here fell by almost 1% during November alone. Lower mortgage repayments as well as petrol and diesel price cuts were the main reasons for the reduction. The 2.5% annual rate is the lowest inflation has been for three years. All the signs suggest that further falls are likely in the months ahead. There is likely to be significant downward pressure on inflation coming from the strength of the euro against sterling. Although this means competitive challenges for Irish exporters, it also serves to make imported goods from the UK cheaper for Irish consumers.