Inflation rising at fastest rate since 2008

The cost of living is increasing at its fastest rate in more than two years, official data has revealed.

Rising fuel prices linked to the Libyan uprising, severe hikes in health insurance premiums and an end to sales last month all combined to hit households in the pocket.

The annual rate of inflation is at 2.2% after seven months of steady rises - a level not seen since November 2008.

Congress economic advisor Paul Sweeney said increasing prices are putting impossible pressure on ordinary working people.

"And we can now expect further increases in interest rates and in commodity prices along with the proposed rise in VAT," Mr Sweeney said.

"The incoming Government needs to bear this increased cost of living in mind, when framing policy."

Congress also claimed the overall cost of living is 26% more expensive than the EU average.

The Central Statistics Office inflation report found household bills such as power, heat, fuel and mortgage repayments followed by personal goods were hardest hit in the last year.

Some of the biggest price hikes were in the insurance market where health premiums soared by 14.4% last month and air travel which jumped by 21%.

Prices on the high street jumped last month as traditional winter sales finished up in February.

Despite the overall increase, the survey found the cost of clothing, footwear, education, furnishings and household equipment and maintenance all fell in the course of the last 12 months.

The annual rate of inflation has increased steadily over the last seven months after falling continuously over the previous year-and-a-half.

Reetta Suonpera, senior economist with Ibec, said inflation will average about 2% this year.

Other business chiefs including Avine McNally from the Small Firms Association and Mark Fielding, chief executive of the Irish Small and Medium Enterprise (Isme) association, warned over the impact the crisis in Libya was having on fuel costs.

Mr Fielding added: "In order to help prevent further sharp increases in inflation, Isme calls on the new Government to immediately reduce the current high excise duties on oil products applied in recent budgets."