In this week’s public policy bulletin, we examine the rise in consumer prices recorded by the CSO together with the latest statistics on the Irish rental market. We also take a look at the recommendations to Government made by the National Economic and Social Council on the potential for improving the tax treatment of landlords. In addition, we review the latest labour market statistics for Northern Ireland as well as taking a look at the European Commission’s 2023 Winter Economic Forecast.
Consumer prices rose by 7.8 percent over the 12 months to January 2023
According to the CSO’s latest Consumer Price Index released this week, prices for consumer goods and services in January 2023 increased by 7.8 percent on average when compared with January 2022. However this was down from 8.2 percent recorded in the 12 months to December 2022. While prices have been rising on an annual basis since April 2021 (with annual inflation of 5 percent or more recorded in each month since October 2021) this is the third straight month where the annual rate of inflation has fallen. The most significant increases in the year were seen in Housing, Water, Electricity, Gas & Other Fuels while price decreases were recorded in education. You can read the full statistical release here.
Rents increased 13.7 percent nationwide during 2022
Rents nationwide have increased by 13.7 percent in the past year according to findings produced in the latest Daft.ie Rental Price Report to Quarter 4 2022. In what the report labels a “grim” rental market starved by a lack of supply, the total number of rental properties available in Ireland stood at below 1,100 as of 1 February. This is down 22 percent on the same date last year and represents approximately one quarter of the average level of availability seen during 2015 to 2019. At €1,733 per month, the average rent at the end of last year was 126 percent higher than the low point of €765 recorded in late 2011. The full report may be accessed here.
National Economic and Social Council (NESC) advises reform of the tax treatment of landlords
This week the NESC published a report into the private rental sector in which it argued that there may be a case for providing ‘a more favourable tax treatment for landlords’ to tackle the current shortage of supply in the market. Noting that ‘a targeted response beyond seeking to increase total supply of all kinds of housing’ is required to address current rental property shortages, the report suggests that any new tax measures could be linked to an improved security of tenure for tenants. Moreover, the report recommends that efforts to bring vacant properties back into use should be 'stepped up' and offers the best way to alleviate the rental crisis in the short term.
Latest Northern Ireland labour market statistics released
The latest labour market statistics release for Northern Ireland showed that payrolled employee numbers and earnings have both increased over the past year. The number of employees receiving pay through HMRC PAYE in NI in January 2023 was 785,400, a 0.1 percent increase over the month and a 2.0 percent increase over the year. Earnings from HMRC PAYE indicated that NI employees had a median monthly pay of £2,012 in January 2023, an increase of £4 (0.2 percent) over the month and an increase of £76 (3.9 percent) over the year. Meanwhile, the claimant count rate remained unchanged for the ninth consecutive month with the seasonally adjusted number of people on the claimant count standing at 35,900 (3.8 percent of the workforce) as of January 2023.
EU economy set to avoid recession according to Winter 2023 Economic Forecast
According to the European Commission’s Winter Economic Forecast released this week, the bloc will ‘narrowly avoid the technical recession that was anticipated at the turn of the year’. Noting how despite exceptional adverse shocks, the EU economy avoided the fourth-quarter contraction projected in its previous Autumn Forecast, the Commission’s current projections have now lifted the growth outlook for this year to 0.8 percent in the EU and 0.9 percent in the euro area. Moreover, the forecast also slightly lowers the projections for inflation in the EU for both 2023 and 2024 with inflation now expected to fall to 6.4 percent in 2023 (down from 9.2 percent in 2022) and to 2.8 percent in 2024. In the euro area, it is projected to decelerate from 8.4 percent in 2022 to 5.6 percent in 2023 and to 2.5 percent in 2024.
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