DUBLIN, March 21 (Reuters) - Irish consumer prices mightrise as much as 3.1 percent, or 1,360 euros per household, ifBritain's exit from the European Union leads to tariffs beingimposed on goods coming into the country, a government-fundedresearch body said on Thursday.
Ireland's export-focussed economy is considered the most atrisk among EU members to Brexit because of its trade links withBritain. But Ireland imports twice as much from Britain as itexports.
A "hard Brexit" - where Britain's trade with the EU wouldrevert to World Trade Organization rules, introducing tariffsand other trade costs - would increase the cost of living forall Irish households by 2 to 3.1 percent, the Economic andSocial Research Institute (ESRI) found.
By comparison, the average cost of living in Britain wouldrise 1 percent in the same circumstances, the National Instituteof Economic and Social Research found last year.
Costs would also rise most for lower-income households, byup to 4 percent, in the highest-impact scenario. The price ofbread and cereals would rise 30 percent. Milk, cheese and eggprices might go up 46 percent.
"As Ireland imports a considerable amount of food productsfrom the UK, a hard Brexit could have an immediate impact on thecost of living. Unfortunately, we find that this impact wouldlikely fall disproportionately on lower-income households," saidMartina Lawless, one of the report's authors.
British household names such as Debenhams, Marks &Spencer and Tesco, Ireland's second-largestsupermarket operator, have a major presence in Ireland. Supplychains are also closely integrated between the two countries.
The ESRI's estimates were calculated in the absence of anychange in consumer behaviour. German discount supermarkets Lidland Aldi, for example, have increasedtheir share of the Irish market to 21 percent in recent years.
So far, Brexit has had the opposite effect on prices. Adecline in the value of sterling against the euro has madeimports cheaper and helped keep inflation almost non-existentdespite rapid economic growth.
Negotiations on the future trade partnership between Britainand the EU are due to start next month. London hopes for auniquely close relationship, but Brussels warns that refusal toaccept single market or customs union rules will lead tounavoidable frictions in trade.(Reporting by Padraic Halpin, editing by Larry King)
