The chart above shows the uptick in February CPI (up 0.9%mom and 2.2% yoy) and HICP (up 0.9% mom and 0.9% yoy).Annualized rates below:
Should we read this as a welcome catch up of prices due to demand changes or due to factory gates tightness? Not really. Take a look at components:
Housing, Water, Electricity, Gas & Other Fuels up +9.5% yoy, Miscellaneous Goods & Services +4.8%, Health +4.1% and Transport +3.5%. Deflation continued in Clothing & Footwear -4.6%, Education -2.9% and Furnishings, Household Equipment& Routine Household Maintenance -2.6%.
Food & Non-Alcoholic Beverages prices were up +0.7% mom and +1.2% yoy to February 2011. This compares to deflation of -8.0% yoy in February 2010. Mom, food prices increased by 0.7% while non-alcoholic beverages prices increased by 2.0%. So we know it wasn't the commodities prices inflation that drove our food prices. Especially since commodities-linked prices of bread&cereals deflated by -3.8%, other milk products -0.9%, other cereals -0.7%, cheese -0.6% and margarine & low fat spreads -0.5%, while butter rose +3.8%, preserves by +15.3%, as sweets and chocolate fell 1.3%. And so on... all over the place, really.
Housing, Water, Electricity, Gas & Other Fuels costs increased by 0.5% mom and by 9.5% yoy. There was a decrease of 10.6% yoy to February 2010. Mom, prices rose for liquid fuels (i.e.
home heating oil) +2.7%, materials for maintenance & repair of dwelling +1.5%, rents +1.0% and bottled gas +0.5%. A price decrease was recorded for mortgage interest -0.1%. But wait, yoy rents rose 0% and mortgage interest rose 20.3%. Clearly, credit crunch is raging for homeowners. One of the core remaining construction-related sub-sectors still standing is maintenance & repair of dwelling. This was down 0.1% yoy in terms of materials, but a significant -5.5% in terms of services - so work wages are down, but inputs on materials side is basically flat. Materials were up 1.5% mom and services were flat in February 2011. Given we import much of the former and retain domestically much of the latter, the news of overall monthly inflation in this category is really not good for Irish economy. We got the wrong end of inflation, folks - inflation that undermines our real incomes without supporting new jobs!
Electricity, gas and other fuels were up 10.5% yoy as a category, electricity up 3.2%, natural gas double that at 6.4%, liquid gas up 37.3% yoy. Again, wrong inflation for growth and much of it is due to changes in taxation structures, state companies surcharges and so on.
Health is a standout in the above chart. Down 0.6% mom but up 4.1% yoy. No need to explain why the cost of hospital services rose 11.5% - say 'Thanks' to our semi-state insurance company policies and the Budget, but not for the insurance prices increases - those are in the Miscellaneous Goods & Services where health insurance rose a massive 17.6% yoy and 14.4% mom.Now - my exclusive - as usual, the breakdown of inflation by state v private sectors:
Or cumulative Rip-Off Government Policies effects:
Yet another legacy of the Social Partnership folks - as the Big Domestic Business (aka semi-states), State Quangonoids and Unions - the Real Golden Circle - take another bite at the economy's pie. The real economy is still on the edge of continued deflation (+0.1% mom), while the surreal Social Partnership-controlled economy is roaring ahead with 1.04% mom inflation, to 2011 fat bonuses. Happy times, as Borat would put it.
3 comments:
"Health is a standout in the above chart. Down 0.6% mom but up 4.1% yoy. No need to explain why the cost of hospital services rose 11.5% - say 'Thanks' to our semi-state insurance company policies"
Woah... doc... slow down. You're pulling a bit of a 'Fox News' there, insofar as you're mixing facts and opinion without distinguishing the two.
Fact: Health costs are rising.
Opinion: This is due wholly to semi-states.
Of course, the opinion is weak. A recent WHO report has shown that technological change is the major driver in health costs:
http://www.euro.who.int/en/who-we-are/regional-director/news/news/2011/03/rising-health-care-costs-due-to-technology2
"Rising health care costs are primarily driven by technological change (accounting for 50-75% of growth in costs)..."
You should be very careful in the way you mix fact and opinion on your blog. I mean, we're all entitled to our opinions, but you should really state when you're talking facts and when you're giving opinions. Better yet, you could do a bit more research into the reasons for the rising prices before you write about them.
Otherwise, someone less polite than I might suggest that you're crow-barring your own ideological viewpoints into ostensibly clean data...
Well, Philip, thanks for the kind warning. And I am glad to have read in your more extensive post about the reportedly factual opinion of my work that my colleagues in economics hold. Alas, your counter-arguments are simply non-falsifiable and hence, in my view, are the very examples of what you have been accusing me of.
WHO statement you cite refers to global not to Irish costs. Thus, it is a representation of a potentially irrelevant fact being presented as a counter-argument to a specific statement.
VHI practices of rationing access to hospital beds is a well documented reality, however, the latest case being one private Cork hospital. Surely you wouldn't suggests that such rationing would be cost-containing?
Your claim as to the effects of aging are hardly quantifiable in Ireland as per OECD comparisons, since we actually have very slow rate of increase in old-age dependency here. According to CSO, in 2006 we had 10.914% of our population in 65+ years of age group. By 2011 this is expected to rise to 11.438%. If technology investments in health were so extensive as you implicitly suggest and if these were not the case of 'gold plating', then this tiny increase in older age population was also associated with better quality of health and thus lower per person incidences of demand for hospital beds. Note - the very same logic as that of Obama Administration push for greater technology utilization in health.
And so on, Philip.
Now, if you want raw facts - CSO provides. Feel free to limit your analysis to these. If you want an argument, that's cool by me. But in such a case, may I suggest a more engaging (aka polite?) manner other than the one deployed by your blog and in part by the above comment.
Lastly, your argument is ad hominem, unless you bother to provide not generalist claims by WHO/OECD, but Ireland-specific facts to support them, as in: show us the actual inflation drivers for hospital beds in Ireland. I might then agree with your view...
As you probably know, depressions rectify back to the mean the disparity of incomes that occurs in a credit bubble whereby those closest the spigot get the most moolah.
The unions will be trying their best to impose the will of the majority of street demonstrators upon the economy, but it is early days yet for any success.
As the unions have some complicity in this particular disaster, they may find it more difficult than usual. This would also reflect the greater wealth in Ireland than in previous depressions.
What use is economics, if there is no real scarcity?
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