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I can’t be the only person who goes to the shop these days and winces at how little €50 seems to buy the family. A couple of essentials in the basket, like say, washing powder, bread and milk, plus dinner for the day for the six of us never seems to leave you with much change, despite the special offers calling to you from the shelves, though they seem to be mostly for crisps and chocolate rather the staples.
The galloping rates of inflation we experienced in 2022 and 2023 – a startling annual hike of 7.8% and 6.3% respectively – led to an alarming cost of living crisis, with people right across the country sharing horror stories of almost unbelievable electricity bills, and huge jumps in grocery prices.
But it’s a problem that hasn’t gone away: it’s coming up in the polls as a key concern for voters – and for the government parties the issue that they haven’t come to terms with is that, with prices still cripplingly high, people are – as Charlotte Fallon so memorably told Simon Harris in that viral video on Friday – still suffering.
It’s my opinion that many of those upset voters would have preferred that the government took decisive action which sought to bring about a correction to price, rather than acting as if they were helpless bystanders who are now trying to ameliorate the financial straits being experienced by ordinary people by handing out some extra benefit payments.
Electricity is one such example. Electricity prices in the European Union actually started to soar in 2021, with a decline in wind power generation (those unreliable renewables) and rising natural gas and coal prices – and this rise was exacerbated by Russia’s invasion of Ukraine in February 2022, leading to the afore-mentioned horror-story energy bills which saw elderly people sitting in freezing houses afraid to turn the heating on.
But while wholesale prices have thankfully come down electricity is still far more expensive now than it was before the prices spiked, and in Ireland it is more expensive than elsewhere. Last month, Eurostat’s confirmed yet again that Irish households are experiencing amongst the highest energy prices in the EU, with the average yearly bill typically €500 higher than the EU average.
According to sites like bonkers.ie and switcher.ie, the average annual electricity bill on a standard tariff is a pretty horrendous €1,752 if you live in a typical three-bedroomed house. And electricity is only one item in the mounting pile of bills pressurising families.
But as with other outlays, its an enormous cost that government blames entirely on outside factors, when in fact, they could be taking steps to ensure electricity prices can come down. As my colleague Maria Maynes wrote, voters don’t feel grateful for the €250 energy credit given in the Budget – when energy costs are not, in fact, outside of the government’s control,
That’s because, as Peter Ryan explained on these pages, electricity is sold by energy generators, such as ESB, which is 95% state owned, to operators in the energy market such as Electric Ireland and Energia. When the state deregulated the energy market, Ireland’s main energy producer, ESB, was forced to divide and to sell electricity to its retail arm Electric Ireland as it would to any other electricity provider. In other words, as Ryan said, the competition rules have “led to a situation where these entities are prevented from acting to lower prices for the hard-pressed Irish consumer”.
In the case of the hard-pressed Irish consumer, Electric Ireland – which is just the retail division of ESB – is forced to keep paying higher costs for wholesale electricity to ESB, because ESB isn’t allowed to collaborate with Electric Ireland to lower prices, even though they are both semi-state bodies.
As Ryan points out: These hedges — where both parties are in actuality just the Irish state itself — could be voided through the state but that would be anti-competitive and against the liberalization policies.
Remember, electricity prices here are the second highest in the whole of the EU – almost 30 per cent above the EU average, in fact – only behind Germany where an obsession with Green energy has brought the once mighty industrial engine of Europe to crisis. As in Germany, the government blind obedience to the policies which keep energy costs high are hurting voters.
Because then there’s carbon tax: Bonkers.ie usefully calculates that “carbon tax adds around €140 in total to your annual natural gas bill” and “around €159 to your driving costs if you have a petrol car and €188 a year if you’re driving a diesel car”.
A bag of coal is currently made up of around €6.68 in carbon tax. And if you use home heating oil, it’s adding around €160 per fill based on a 900-litre tank.
So the carbon tax added to our bills by the government more than offsets the energy credit of €250 we’re supposed to feel grateful for? No wonder people feel broke.
But the squeeze is happening everywhere. Charlie Weston in the Independent recently reported that Irish “motor insurance premiums are now rising at 15 times the rate of general inflation, with above-average rises in the cost of eating out, going to the cinema and package holidays too”.
You read that correctly – even though the rate of inflation has fallen dramatically for some goods and services, some of the key costs continue to make customers feel as though they are being fleeced.
“Motor premiums have been rising for 14 months in a row. The cost of insuring a vehicle was up by 11pc in the year to October, according to the latest inflation figures from the Central Statistics Office (CSO)”.
Yet the government has been curiously inactive in tackling the motor insurance industry despite assertions that drivers who have not made claims still see their premiums rising as the insurers rake in profits.
And back to the staples: the CSO’s Chris Sibley, in the office’s April report, explained that one of the many items they track is the price of a white sliced pan – which was, on average, costing €1.28 in January 2019 but had risen to €1.64, up 28.1%, in April 2024.
“Similarly, for a litre of low fat milk, in January 2019 the average national price was €1.04, whereas in April 2024 it was €1.25, an increase of 20.2%. When it comes to prices for Electricity, Gas and Other Fuels, these increased by 64.6% in the same period. From this we can see that inflation is experienced across small and large purchases, but it all adds up,” he wrote.
It sure does. It adds up to a feeling of being stretched too far too often – a general anxiety that costs are out of control and can’t be managed.
In addition, there’s the significant rise in probably the biggest expenditure for many families each month – the mortgage. As everyone knows, one of the key tools used to tackle inflation is to raise interest rates, mostly to encourage saving rather than spending. This led to spiralling monthly mortgage repayments for families in Ireland, who were literally left punch-drunk by the effect of one soaring cost landing after another.
Because we’re a member of the European Union, we had to accept and pass on the ECB’s steady raising of the rate of interest – which then led to enormous increases to the already crippling mortgage repayments that families need to take on to own a perfectly ordinary home in modern Ireland.
And although the ECB’s rates have been cut three time since June of this year, recent figures from the Central Bank show that Irish mortgage interest rates increased in September,
The average rate on a new mortgage in this country increased from 4.1% in August to 4.3% – which means Ireland now has the 6th highest rate in the euro area, up from 11th the previous month.
Again, there’s a feeling out there, in the conversations I have at least, that much as with electricity or motor premiums and sliced bread, the Coalition government has been happy to leave the Irish people at the mercy of the market – and that can be a bitter pill when the same taxpayers are still paying USC to bear the cost of bailing out the banks who are now not passing on interest cuts.
No wonder polls didn’t show much of a budget bounce for the Coalition parties. The cost of living crisis hasn’t gone away, and a few handouts from the Budget might not soften enough of the electorate who are sick of feeling stretched, anxious, and downright fleeced, as the government leaves us to the mercy of the market.
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