Consumer prices to rise in coming months as the reality of Brexit sinks in

HOUSEHOLDERS have been warned that consumer prices are likely to rise in the coming months.

It comes despite data for December from the Central Statistics Office (CSO) showing consumer prices fell by 1pc when compared with the same month last year.

The CSO information shows that consumer prices have now dropped on an annual basis for nine months in a row since Covid-19 restrictions were first introduced last March. But Brexit could bring price falls to a crashing halt.

Bank of Ireland group chief economist Dr Loretta O’Sullivan said subdued demand on foot of the pandemic saw inflation dip into negative territory in 2020.

But she warned: “Increased red tape in trade with the UK implies some upward price pressures for 2021.”

Brexit means extra costs for importers and exporters.

Customs and other bureaucracy are a cost to businesses and some of this is expected be passed on to consumers.

An Economic and Social Research Institute (ESRI) report calculated that this could add up to €890 a year to average Irish shopping costs due to higher prices on UK imports.

This was based on the assumption that the full cost was passed on and that consumers did not substitute the imports with cheaper goods.

Shoppers in the North are already seeing empty shelves as stores are unable to get goods from Britain because suppliers have struggled to shift to new customs processes.

However, last month saw overall prices in the Republic fall due to transport costs coming down.