Consumer prices in Ireland are 40% higher than the European average
Consumer prices in Ireland were among the most expensive in the EU last year – with the cost of goods and services a shocking 40% above the EU average.
Ireland ranked just behind Denmark for overall price levels in the bloc in 2021, according to new figures released by the European Commission.
But the public will feel the pinch even more this year, with inflation hitting a 40-year high of 8.3% last month.
Consumer experts said the Irish had become ‘conditioned’ to high prices and blamed high tax rates for putting us out of step with Europe.
The figures show an increase since 2016, when the same study put Irish overall prices at 29% above the EU average.
Last year, alcohol and tobacco prices in Ireland were the most expensive among the 27 EU member states, more than double the average cost – 105% above the EU average . The Republic also had the third most expensive price for food and non-alcoholic beverages at 19% above the EU average, with only Luxembourg and Denmark being more expensive for common groceries.
Housing costs such as rent and mortgage repayments, as well as gas and electricity prices are again the most expensive, 89% above the EU average.
Health costs are the most expensive in the EU, at 72% above the average, and communication costs are the third most expensive at 47% above the average.
The results are based on price surveys of over 2,000 consumer goods and services in the EU as well as Switzerland, Iceland and Norway. Britain was not included in the survey.
The head of the Consumers’ Association of Ireland, Dermott Jewell, claimed the Irish have learned to accept high prices. But he told the Irish Daily Mail: “As the comparisons start again, I think it’s upset a lot of people because we’re so high in the ratings.” Our levels of taxation including VAT etc. are so high that they make the cost of living out of step with very, very many of our European counterparts.
Our VAT rate of 23% is the fourth highest rate in the EU, the highest being 27% in Hungary, followed by 25% in Croatia, Denmark and Sweden, then 24% in Finland and Greece. Malta has the lowest VAT rate at 18%, but Europe’s largest economy Germany has the second lowest at 19% along with Romania. The rate for France is 20%.
Spokesman for price comparison site Bonkers.ie, Daragh Cassidy, said the government and Taoiseach Micheál Martin will have to act, remarking: “No one is under the illusion that Ireland is a cheap place to live.” However, the magnitude of the price difference between Ireland and our neighbors is quite shocking. And it’s getting worse, which doesn’t bode well for our competitiveness.
“In 2016, prices in Ireland were 29% above the EU average. But that gap has widened every year since. Of course, salaries in Ireland are also above the EU average. However no more than 40% for most people. I urge the government to consider measures that are within its control to reduce the impact of high prices and the cost of living.
“At 23%, our VAT rate is among the highest in the world, while GP visit fees and hospital stays undoubtedly lead us to have the highest healthcare costs in the world. EU. Meanwhile, we have astronomical childcare costs, while government stamp duty drives up car insurance and home insurance.
“Consumer bodies such as the CCPC and regulators such as the CRU for energy and ComReg for telecommunications also need to do a better job of advocating for consumers more. If they need more powers to enforce laws and
lower prices, they should demand them. I would also like the creation of a new ministerial post for consumption.
Duncan Graham, from retailer lobby group Retail Excellence, agreed the 23% VAT rate was a major factor in the high costs facing consumers here, but also pointed to the impact of Brexit.
Mr Graham added: ‘While Irish retailers have tried to move their supply chains to other parts of the world…we are still very much attached to the UK as it is our closest neighbour.’ It’s going to take some time to change the supply chain and it’s also going to take some time to change people’s tastes for these British products.
Ireland and Denmark were the two costliest EU member states, as they are both small and geographically on the periphery of Europe “resulting in higher transport costs”, Austin said. Hughes, chief economist of KBC Bank.
“An important component of the higher price point tends to be food and drink prices. So emphasizing quality food and taxing alcohol are choices within the country. We have to import but we produce a lot and we have quite high standards for food and food quality.
The European Commission said the wide variation in price levels for products such as alcoholic beverages was due to large differences in taxation for these products, with Ireland having particularly high excise duties.
The report shows that communication costs in Ireland are the second highest in the EU, energy costs are the fifth highest, while prices for hotels and restaurants in Ireland were 29.5 % above the EU average in 2021.
The cost of personal transport equipment such as cars and bicycles in Ireland was 13.1% above average – the third highest price level in the EU.