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Ireland's consumer price index continued to decline in October, recording its tenth annual fall in a row, data from the Central Statistical Office showed on Thursday.
The consumer price index decreased 6.6% year-on-year in October, compared to the 6.5% fall in the previous month. A year ago, consumer prices had grown 4%. According to economists, Ireland last witnessed such big declines in prices during the Great Depression in the 1930s.
Food and non-alcoholic beverages prices decreased 6.4% on an annual basis in October, while clothing and footwear prices slipped 12.8%. At the same time, transport charges fell 3.1%. Mortgage costs plunged 48.5%.
On a monthly basis, the CPI declined 0.2% in October, after falling 0.4% in September. This was the second monthly decline in a row. Consumer prices rose 0.4% in August.
"The last thing the economy needs at this juncture is to get caught in a deflationary spiral," Alan McQuaid, chief economist at Dublin-based stockbroking firm Bloxham said in a note. "However, on the assumption that the global economy picks up and commodity prices rise in the coming months, then hopefully that should be avoided."
Ireland's harmonized index of consumer prices dropped 2.8% on an annual basis in October, compared to the 3% fall in the previous month. Month-on-month, the HICP decreased 0.2% in October, after falling 0.4% in September.
The Bloxham economist noted that the vast amount of economic slack that has built up during the recession, will take years to work off. Hence, he said, "deflation still looks like a bigger risk than runaway inflation in the short-term." According to McQuaid, there is little justification in public sector unions opposing much needed wage cuts, particularly as government services are one of the main areas where inflation still prevails.
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