FALLING PRICES have offered some relief to hard-pressed homeowners and to the tens of thousands of people who have lost their jobs during the past year. The latest figures from the Central Statistics Office have plotted an annual deflation rate of almost 6 per cent, with mortgage interest costs falling by over one-third because of unprecedented rate cuts by the European Central Bank. When mortgage charges are stripped out, the cost of living has fallen by 2.6 per cent.
Hoteliers and other business representatives have pointed out that while costs and charges have generally fallen in the private sector, they have increased in such areas as health and education and the provision of local authority services. In addition, insurance costs have risen by 20 per cent. At a time when survival is the most pressing consideration for many businesses, the Government and its statutory agencies must work to ensure value for money and guard against price-fixing.
A number of recent surveys has shown how expensive it is to live in Ireland and how our basic costs exceed those of our European neighbours. A great awakening took place as the recession deepened, the property bubble deflated and unemployment levels soared. Shopping around and getting value for money became the thing to do. Even for those who remained comfortably off, years of extravagance gave way to cautious money-management.
Becoming competitive is a vital element of our economic recovery. Fianna Fáil-led governments allowed price inflation to steadily erode competitiveness. And we are now engaged in the painful process of undoing that harm. Falling prices and lower wages in the private sector are just part of the exercise. Protected sections of the economy and public services have yet to play their full part. And reform of the taxation base will have a major contribution to make. It all adds up to a reduced standard of living. That should not mean, however, that every penny is saved for a rainy day. In effect, that rainy day is here.
We can help ourselves and minimise job losses and business closures through selective spending. Good value can be had for some major purchases. Food prices are down and there has been aggressive price-cutting in clothing, footwear and textiles. Signs of a tentative recovery in retail sales are encouraging. And there are hopes that the worst of the recession may be over in the United States, Germany and France. We should count our blessings.