Later this week, the Central Statistics Office (CSO) will publish its consumer-prices report to the end of July. Its headline figure will show another apparently impressive fall in the consumer price index, because mortgage-interest payments fell precipitously in the last 12 months.

In June, the prices in the basket of goods and services the CSO surveys slid by an annual rate of 5.4%, suggesting that annual prices were tumbling at a faster rate than even during the 1930s. The belief that prices are falling rapidly across the economy has taken root among opinion formers and policymakers.

Even if the recession were milder, price cuts should be expected here, because in no other eurozone economy are consumers better placed to tap the surge in the value of the euro. Slumping sterling ought to make about half of all our foodstuffs and all the 'white goods' imported from Britain significantly cheaper, if the price cuts were passed on to shoppers here.

Few opinion formers are more influential than Colm McCarthy, chairman of An Bord Snip, whose report last month recommended cutting €5.3bn in government spending.

McCarthy believes that payments to people receiving social welfare should also be reduced because consumer prices are falling. In media interviews last month, he said that sub-indices produced by the CSO, which strip out items such as mortgage-interest payments, showed that falling prices had boosted the value of state payments. Former taoiseach Garrett FitzGerald wrote that people on social welfare "received an unintended increase of almost 5% in their purchasing power" because prices had fallen, not risen as the government had expected.

But it is not just the swelling numbers of unemployed households who, we are told, are benefiting from lower prices. In its latest report, the National Consumer Agency, which was late off the mark in surveying prices north and south, appeared almost relieved to be able to report that supermarket prices had fallen. It trumpeted that its research showed "major reductions in grocery prices" driven by price-conscious shoppers.

The Sunday Tribune looked back at the last three years of price changes across the economy. The CSO supplied detailed sub-indices of prices of major household expenditures since the height of the boom in June 2006 to this summer. The period covers times when world energy prices, food and mortgage payments were rising and then falling sharply.

The analysis covered the categories of costliest goods and services that households spend most of their budgets on – housing, restaurant and hotels, transport, food and drink, and recreation and culture. By expenditure, the five categories account for about 65% of the consumer price basket that the CSO surveys for price changes every month. Here's what the analysis showed:

Housing, mortgages and rents

The category, which includes water, electricity and gas prices, is the single-largest category, accounting for 16% of an Irish household's spending. Mortgage-interest payments fell 46% in the past 12 months, as lenders passed on cuts in European Central Bank rates. But the CSO figures show that this year's mortgage-payment drop exactly cancels out an earlier rise in mortgage payments in a previous year – leaving monthly mortgage payments 17% higher than at the height of the boom in June 2006.

Private rents, according to the CSO figures, only fell half as much as the drop in this year's mortgage payments, suggesting landlords have failed to pass on most of their savings to their tenants. When rent rises over previous years are taken into account, rents are as costly as mid-2006 boom levels. Rents for local-authority houses, which increased 4.5% in the year to June, were 30% higher than those charged in summer 2006.

As world oil prices slumped, household's fuel costs, including electricity and gas, dropped over 25% in the year. However, utility prices remain 14% higher than the summer of 2006, suggesting that state-energy providers who promise autumn price cuts of 10% may at most be only passing on deferred savings from plunging world energy prices.

Restaurants and hotels

Yes, expenditure on eating out and overnight stays is the second-largest item of household expenditure, accounting for over 15% of the annual consumer price basket. Despite the perception that prices are tumbling, prices in restaurant and hotels were almost unchanged in the past year. According to the CSO figures, restaurant and hotel prices in June were 7% higher than when surveyed in the boom-time summer of 2006.

Transport

Transport is the third-largest cost for an Irish household, accounting for over 13% of monthly outgoings. Despite global oil prices falling much more steeply, prices fell in the year to June by just over 6%. Price increases in the previous two years leave transport costs as they were in summer 2006.

Food prices

Excluding alcohol, food prices rank as the fourth-largest item on a household's budget, accounting for almost 12% share. Despite much publicity that suggests retail food prices were tumbling, CSO sub-indices suggest a huge 'stickiness' in price cuts: a 3.3% fall in prices for the 12 months to this summer came after hefty food-price increases in the previous two years. Despite the benefits of the surging euro and falling world energy costs, food prices, the CSO figures show, were 7% higher than in June 2006.

Recreation and culture

Spending on so-called big-ticket items such as package holidays help make this the fifth-largest expenditure category, accounting for 10% of a household's budget. Creeping price increases across this group, that includes cinema and concert admissions and gym memberships, can have a significant impact on Irish consumer prices.

Despite slumping aviation fuel costs, the cost of a package holiday rose over 4% in the last 12 months, the fastest rate for three years. This summer a package holiday costs 9.5% more than in 2006, according to the CSO. Most other items, including attendance at sporting events and music gigs, increased in the last year, lifting ticket prices by a remarkable 10% above 2006 boom-time levels.

The illusion of falling prices

» Private rents have fallen, but landlords slow to pass on lower mortgage costs still charge summer 2006 boom-time rents

» Package holidays, despite much lower jet fuel, costs 4% more than last summer, and 9.5% more than in 2006

» Mortgage interest payments are still 17% above summer 2006 levels. Interest payments will likely rise in future months

» Prices in restaurants and hotels are 7% above boom-time levels

» Food, despite much trumpeting of price cuts, costs 7% more than summer 2006 prices

» The ECB warned last week about renewed rising world commodity and energy