Households hit as price hikes mask sense of recovery

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Households hit as price hikes mask sense of recovery

Increased tax burden sees families paying more for services


PRICES: More consumers are being pushed towards seeking cheaper options. Stock picture
PRICES: More consumers are being pushed towards seeking cheaper options. Stock picture

Savings made on groceries are being wiped out by household bills and income tax pressures on working families since the collapse of the Celtic Tiger, a Sunday Independent analysis of Central Statistic Office (CSO) figures shows.

It comes as a leading economist said Ireland’s workforce was being loaded with an increased tax burden and higher living costs.

Economist Jim Power said the overall income tax take from the workforce has increased 72.6pc since the boom.

Weekly grocery bills were 13.9pc lower last year when compared with 2008. But CSO data shows families are spending more on household charges, insurance, electricity and gas – wiping out any gains made over the past 10 years.

Despite low price inflation since 2008, the cost of essential items have slowly crept up to and even surpassed boom-time levels. The cost of living is now on a par with 10 years ago, preventing working families feeling any gains made during the economic recovery.

Economist Jim Power said the squeezed middle was feeling the brunt of these increases. “For a decade there has been very little in the way of wage growth. Over that period the personal tax burden has increased dramatically,” he told the Sunday Independent.

“Back in 2006 we had roughly the same number of people working in the economy as we had in 2018. However, back in 2006 they paid €12.4bn in income tax, 27.2pc of the total tax take. In 2018, roughly the same number of people working paid €21.4bn in income tax and accounted for 38.2pc of the total tax take.”

In the past 10 years, hourly pay across the workforce increased by just €1.40.

A Sunday Independent analysis of Central Statistic Office figures shows despite low inflation rates the cost of living has crept back up to match ‘end of boom’ levels.

As well as savings on food shopping, the figures show significant reductions in prices charged by high-street retailers. Clothing and footwear prices are down 54.6pc in the past decade.

However, increased energy bills, transport costs, insurance and other household expenditure have prevented consumers feeling the benefits of the economic recovery.

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“Any price savings people make are being eaten up in other areas and if you look at the growth in the market share of Aldi and Lidl, more consumers are being pushed towards seeking cheaper options where they can,” Mr Power said.

Rising insurance costs were a huge financial burden.

On average, insurance costs in the year to last November were double those for the corresponding period in 2008, just as the Celtic Tiger boom was ending. The CSO Consumer Price Index shows house insurance has increased 54.9pc during this period.

Car insurance has increased 56.2pc. Health insurance is where the biggest increases have been felt – up 141.3pc in the 12 months to last November compared with the same period in 2008.

“This analysis shows tackling the claims culture here is absolutely essential if you want to get your insurance costs down,” said Mr Power.

“People who are making spurious claims for all sorts of injuries are basically stealing money from people’s pockets.”

Other domestic charges are also hitting consumers hard.

Electricity prices were up 30.9pc now compared to 2008, with gas prices up by more than a fifth (20.9pc).

Even modest savings, such as a 3.5pc decrease in the cost of home heating oil, was being offset by a rise in the cost of solid fuels. Coal, briquettes, firelighters and similar products are 21.6pc more expensive now.

Other fuel costs were also up, with petrol costing 17.8pc more and diesel up 4.8pc.

This feeds in to an increase in other transport costs.

Bus fares are up 59pc and passenger journeys by train cost 38.5pc more in the past 12 months compared with the year before the financial crash.

Current health costs are also more expensive.

The analysis of CSO data shows visits to a GP surgery is 9.5pc more expensive now.

Hospital services are up 25.8pc.

Meanwhile, dental services are 18.3pc higher.

The cost of sending a child to third level is now 84.6pc higher. It is 26.4pc more expensive to have a child in secondary school.

Parents whose children are not of school-going age have also faced increased costs.

Childcare costs 13pc more last year compared with 2008.

Treats also cost more now. A meal in a restaurant is 20.3pc more expensive. A measure or spirits costs 15.3pc more. A bottle or pint of beer costs 13.8pc more now, while the cost of a glass of wine rose 11.1pc last year.

“From a consumer’s perspective it is a good time to be buying items like clothes and food, whereas, on the other side of the coin we are all being eaten up by insurances costs and other bills that are rising very strongly,” said Mr Power.

“There has been a massive increase on the burden of income tax over that decade.

“If you combine that with the lack of wage growth and superimpose on top of that the massive escalation we have seen in the price of stuff like insurance you can see why we have a squeezed middle out there.”

Sunday Independent


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