Ireland’s annual rate of inflation rate was 1.7 per cent last year, less than the 2.6 per cent figure of 2011, and far lower than the EU average. That inflation rate reflects weak demand in a slow growth domestic economy that has been depressed by high unemployment and declining real household incomes. Low inflation has helped to offset higher taxes introduced in recent budgets.
However, a survey by the Consumers Association of Ireland (CAI) of grocery prices, suggests the price of some staple items has increased sharply. According to its latest survey, the cost of a typical basket of groceries – including bread, milk, sugar and tea – has risen by more than 12 per cent in less than two years. And it has found that a 1kg bag of sugar has risen by 38 per cent in that time.
Just why some of these prices should have risen so fast is unclear. In the case of sugar, its price on world markets has declined sharply in the past 12 months – down by over 20 per cent. And although EU sugar prices are some 50 per cent higher than world prices – because of supply shortages and the high tariffs imposed on non-EU imports – the rise in the domestic price of sugar for Irish consumers does seem excessive. The CAI points to almost identical prices for staple goods in many major supermarkets as evidence that there is a lack of meaningful competition on price, for which poorer consumers are paying dearly.
The Central Statistics Office (CSO), which records changes in consumer prices on a monthly basis, shows that food and non–alcoholic beverages fell by just 6.3 per cent in the four years between 2008 and 2012. Although this CSO category includes many more items in its survey than those used to make up the CAI’s grocery index, nevertheless, the sharp rise in the cost of what are basic food necessities does require some explanation. Those less well off – many of whom rely on a State pension that has declined in real terms in recent years – have, undoubtedly, found it far harder to balance their budgets.