Why does living in Ireland cost so much? - Today FM
In recent months we’ve seen price increases across the board, from energy costs to the price of everyday goods and services. The cost of living in Ireland is far higher than in other European countries and with inflation on the rise, we’re likely to see prices increase further.
Daragh Cassidy, Head of Communications at bonkers.ie, appeared on Today FM alongside Charlie Weston, the Personal Finance Editor of the Irish Independent, to discuss the high cost of living in Ireland.
Listen back to the interview above, or review the main points discussed below.
Alcohol price increases
There’s news that the price of alcohol will be increasing further.
Heineken has said that it’s going to raise its prices. The company fears that inflation will drive drinkers away from pints. People will have less money to spend, so they’ll buy fewer pints. Heineken has stated that to maintain its profit margins, it needs to increase prices.
It seems counterintuitive, as you’d think they would drop the price if they are worried people will be drinking less due to higher inflation. Strangely this is not the case. The Dutch brewing joint has revenues of €22 billion. Guinness has also announced a price increase.
The minimum unit pricing (MUP) has meant that a slab of Guinness has increased from €20 to €40, which is a sharp increase. Even if drinking at home, you won't be able to get the value you could've got before Christmas.
This will also impact publicans, who have already expressed concern about electricity bills increasing. Prices for everything are spiralling.
Petrol and Diesel prices skyrocket
We know that a barrel of oil has gone way up in price and we’ve been hearing that the cost at the pump has gone up by at least a third. The increase is frightening.
Compared to the cost of running a car two years ago, the cost of running the average petrol car for a family, such as a VW Polo, has gone up by €600 a year due to the petrol and diesel price hikes.
This is because of the relentless increase in the price of oil, which is at a 7-year high.
Taxes on petrol and diesel
Petrol and diesel have four taxes on them:
- The carbon tax
- Excise duty
- VAT at 23%
- The NORA levy to ensure we have strategic reserves of oil.
This means that people who are car-dependent in rural Ireland are being hit hard. Overall, motorists are pumping about €4.5-5 billion a year into the Exchequer. About €2 billion of this is in excise duty. This is something the Government needs to look at and address.
How else does Government tax affect Irish consumers?
We carried out an analysis on Government taxes and how they impact everyday essentials.
Whether it’s alcohol, petrol, or regular goods and services like shampoo, aftershave, or buying a phone or laptop, the Government really does have its hand in our pockets a huge amount.
A lot of this comes down to VAT. It’s 23% in Ireland, which is one of the highest in the world. The Scandinavian countries charge a bit more but compared to other countries we have a high VAT rate.
In the UK VAT is 20%, in Germany it’s 19%, in Canada and Australia it varies between 5-10%, depending on the region.
We essentially give the Government a quarter of what we pay for goods and services. Everybody has to pay the same level of VAT. If someone on €20,000 goes and buys a phone, they need to pay the same amount as someone earning €60,000.
Subsidies at minuscule levels
The Government isn’t helping enough, particularly around areas to do with childcare and public transport. The level of subsidies those industries have compared to other countries is minuscule and this is why you can go to places like Norway and Switzerland, which are extremely expensive countries and still get cheaper childcare and public transport because the Government is subsidising it.
We get hit with the worst of both worlds if that makes sense. We get charged on lots of things, and when we need the Government to subsidise things, they don’t.
The cut in public transport fares that was announced recently will benefit around 800,000 people, but it doesn’t help all of the people who don’t have access to public transport and have to use their car to get to work, school or college. We often forget that there are so many outside the main cities who have access to limited public transport options.
The decrease in public transport costs is a welcome initiative, but it’s only until the end of this year and then it will go back up again by 20%.
High cost of public transport
There was a report from two years ago that was carried out by Deutsche Bank called Mapping the World’s Prices and it looked at the cost of a monthly public transport ticket in cities all over the world, and Dublin was the second most expensive city in the world, only behind London.
It’s more expensive than Tokyo, New York and Toronto, so transport in Ireland is very expensive.
Renewing your car insurance
Motorists are somewhat being tricked about the amount of money saved when they renew their motor insurance as well.
New insurance regulations came into effect a while ago, which meant insurers must tell you what you paid last year and the years before when they send you your renewal letter.
Motor insurance has come down a bit because of these judicial guidelines and it’s down again from last year. People see that their renewal quote is down by 5-6% and think it’s a good decrease, so they don’t look for better value.
Instead, motorists should be seeking a better deal. If you do some work yourself and go to a broker or research, prices could be down by 20%. People are essentially being fooled by this when they could do a whole lot better.
The law of unintended consequences is at work here. A consumer protection measure is backfiring a bit. To be fair, it’s not the insurance companies who are doing this but it has worked very much to their advantage.
Save on your everyday expenses on bonkers.ie
Whether you’re looking to save money on your energy bills or insurance costs, bonkers.ie has you covered. While we can’t stop rising inflation, we can help you save on your everyday bills and expenses, which will help put money back into your pocket.
If you’re out of contract with your energy supplier, we’d strongly recommend switching to a cheaper energy deal, if you haven’t already done so. You can use our free energy comparison tool to complete the switch online. It’s quick and easy! Check out the steps involved in the comparison process here.