Renting households and those headed by younger people are being hit harder by the current surge in inflation, new research indicates.
This is because they spend a greater proportion of their income on rent and energy.
The Central Statistics Office (CSO) calculated that households headed by people aged under 35 had an estimated inflation rate of 3.9 per cent in June.
This compares with a headline rate of 3.4 per cent for the economy as a whole and 3.4 per cent for households headed by people aged 35 to 64.
The main drivers of the higher inflation rate for households headed by people under 35 were rent, accounting for 0.9 per cent of the total, and restaurants and accommodation services (0.8 per cent).
Renting households were also found to be experiencing a higher rate of inflation at 3.7 per cent.
This compared with a rate of 3.4 per cent for households paying a mortgage and 3.1 per cent for households that own their home outright.
The CSO noted that for households which are renting, the largest contributor to their annual inflation (1.3 per cent of 3.7 per cent), followed by electricity, gas and other fuels and restaurants and accommodation services (both 0.5 percentage points).
Between June 2021 and June 2026, overall inflation as measured by the consumer price index (CPI) was 24.5 per cent while estimated inflation by income quartiles show a range from 24.2 per cent for higher-income households to 25.7 per cent for lower-income households.
“Household groups which spend higher-than-average proportions of their total expenditure on electricity, gas and other fuels, on mortgage interest payments or on rent have experienced higher inflation than the overall CPI, particularly in the last 12 months,” the CSO said.
Headline inflation in the economy is expected to average 3.4 per cent this year.
But the Central Bank warned this week that there were significant upside risks to the inflation projections given the uncertainty over the path of the conflict in the Middle East.
In a severe scenario where oil and gas prices rise sharply, inflation could accelerate above 5 per cent, it said.
Separately Central Bank governor Gabriel Makhlouf has declined to rule out an interest-rate hike in October if circumstances require it.
He told Bloomberg Television on Thursday that while there was currently no worrying sign of inflation spreading into wages, officials would take each decision on borrowing costs as it came.
“At a time of uncertainty, every meeting is a live meeting for the European Central Bank,” Makhlouf said when asked if that was the case for the next one on October 29th.
“You can’t rule out anything that might happen in future meetings, nor can you rule them in.”
He spoke in the wake of the US Federal Reserve’s rate hike on Wednesday, and at a time when markets are undecided on whether the ECB will follow up with a consecutive move so soon after its increase last week.
“Markets understand that we’re committed to delivering on our 2 per cent inflation target, and at the moment the numbers aren’t as strong as we want them to be,” he said. “I’m not in the business of saying whether markets are right or wrong.” – Additional reporting: Bloomberg