People spend less on alcohol but more on tobacco

Irish people are spending less on alcohol but more on tobacco, according to new figures released yesterday by the Central Statistics Office (CSO).

The headline figures in the CSO report on National Income and Expenditure for 2005 are in line with earlier estimates with Gross Domestic Product (GNP) rising by 5.5 per cent and Gross National Product (GNP), which strips out the impact of multinationals, revised downwards fractionally to 5.3 per cent from 5.4.

However, the data provide a more detailed breakdown of consumer spending patterns than had been previously available. This points to the increased economic wellbeing of consumers, according to IIB economist Austin Hughes but also their more selective approach to how they spend their money.

Sale of alcohol registered one of the slowest rates of increase - just 0.7 per cent more by volume. Mr Hughes said this pointed to an element of consumer fatigue with the continuing rise in the price of alcoholic drinks.

Sales of motor vehicles were almost 15 per cent ahead by volume with the data showing that prices in this area were dropping slightly. Similarly, mobile phone sales were nearly 16 per cent ahead in volume terms, again despite falling prices.

The figures show the impact of rising energy prices. Spending on fuel and power jumped by 17.1 per cent last year even though, in volume terms, there was only a 3.8 per cent increase in the amount used.

One surprise in the figures is the increase in tobacco sales after two years of significant declines following the introduction of the ban on smoking in public places. The amount spent on tobacco rose 4.6 per cent last year. In volume terms there was a 3.5 per cent increase.

Mr Hughes attributed this, in part, to migration although he noted that the effect of the smoking ban is gradually diminishing.

He said, overall, there were some signs of people becoming more resistant to rising prices but, overall, Ireland had an economy where people are getting wealthier and spending more on lifestyle items along with recreation and services.

There was very significant growth in the amount of spending outside the State, according to the figures. However analysts cast some doubt on the 19 per cent growth figure, after 2004 data showed no increase in this area.

The general picture is of an economy that is becoming more dependent on personal consumption and investment, according to the data. Growth in investment accelerated last year to 12.5 per cent in volume terms from a rate of 4.2 per cent a year earlier and well above the 5 per cent five-year average.

There was a 3.9 per cent increase in exports by volume, lower than the 6.5 per cent rise in the volume of imports.

The pace of personal consumption of goods and services by volume is also increasing, rising by 6.6 per cent in 2005 against 3.8 per cent a year earlier and an average of 4.5 per cent this decade.

Personal spending rose 7.9 per cent while Government spending was 10.4 per cent ahead of 2004. Allowing for price rises, the CSO said the real increases were 6.6 per cent and 4.6 per cent respectively.