Consumer prices in Ireland are now over 46% above the EU average, surpassing even Denmark.
In news that may not surprise anyone, latest figures from Eurostat, the EU's statistical agency, have revealed Ireland is now the most expensive country in the EU with prices here over 46% above the EU average.
The gap is also widening. Back in 2015, prices here were 28% above average but the gap has gotten bigger every year since.
Prices in Ireland are now above traditionally expensive countries such as Denmark, Sweden and Finland. However we still trail non-EU countries Switzerland and Iceland - for now!
Romania has the lowest prices in the EU at 42% below average, followed closely by Bulgaria.
Taking a deep dive into the figures, Ireland has the second most expensive alcohol in the entire EU with prices over double the EU average. Only Finland has higher prices. The price of alcohol is lowest in Hungary where it's about 18% below average.
The huge price variation in the price of alcohol among EU countries is mainly due to differences in taxation, with Ireland having some of the highest rates of tax on alcohol in the world. And of course the recent introduction of Minimum Unit Pricing (MUP) has added to costs even more.
Ireland is the second most expensive country for electricity, gas and fuel with prices over 38% above the EU average (behind only Denmark where prices are almost 50% above average). If you want to keep warm (or cool) for cheap, head to Hungary which has the cheapest prices at 62% below average.
Ireland also performs poorly when it comes to restaurants and hotels, where prices are the fourth most expensive in the EU, at 29% above average.
Ireland also has the fourth most expensive food and non-alcoholic drink in the EU, with prices here 15% above average.
Meanwhile our health costs are the most expensive in the EU, at a staggering 82% above average.
And our communication costs are the third most expensive at 56% above average.
For recreation and cultural activities, things are slightly better. We're 'only' the fifth most expensive, with prices 17% above average.
Ireland performs better on clothing and footwear, where prices here are actually 1% below the EU average. Our prices for household furnishings (such as carpets, flooring and furniture) are also competitive with prices here pretty much bang on the EU average. And prices for household appliances like fridges, freezers and washing machines etc are just above the EU average.
Danger to competitiveness
No one is under the illusion that Ireland is a cheap place to live. However the scale of the difference in prices between Ireland and our neighbours is pretty shocking.
And it’s getting worse, which doesn’t bode well for our competitiveness.
Of course wages in Ireland are also above the EU average. However not by over 46% for many people.
Many other countries in Europe also benefit from far cheaper childcare, which isn't covered by these figures.
Why is Ireland so expensive?
There are several reasons why prices here are so high.
- Our higher wages
- A lack of competition in certain sectors
- High taxation on certain goods such as tobacco and alcohol
- Low government subsidies in certain areas such as public transport and childcare
- Our small, dispersed population
- High insurance costs for businesses, which then get passed on to consumers
We delve into all these reasons in more detail in this article here.
What can be done?
Ireland will never be as cheap as Romania, Poland or Bulgaria etc. And we need to remember that many of the most expensive countries in the world also have among the best standards of living.
But prices here are beginning to spiral out of control compared to our neighbours.
At a minimum, the Government should look at measures that are within its control to lower the impact of high prices and the cost of living in Ireland.
At 23%, our rate of VAT is among the highest in the world. While charges for GPs visits (and until recently public hospital stays) undoubtedly contribute to us having the highest health costs in the EU.
Meanwhile we still have very childcare costs. While Government stamp duty leads to higher car insurance and home insurance.
Meanwhile, repeated failures to tackle our comp culture means some businesses continue to pay astronomical insurance costs, which leads to higher prices.
Consumer bodies such as the CCPC, and regulators such as the CRU for energy and ComReg for telecommunications also need to do better jobs and stand up for consumers more. If they need more powers to enforce laws and bring prices down, they should demand them.
Finally, the Government should look into creating a new ministerial position for consumer affairs. We rightly have a huge focus on business and enterprise in almost all areas of government in this country. But that same focus isn’t extended to consumers.
Let's hear from you!
What do you think should be done to tackle the cost of living in Ireland?
Let us know in the comments below or get in touch with us on social media.