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The cost of living is a big election issue even if price rises are slowing

The outgoing government handled some elements of the cost-of-living crisis well, but failed miserably in other areas

The annual cost of heating and lighting a typical family home in Ireland is about €1,200 more than it was before the last general election. Practically every other household cost has risen too. Photograph: Niall Carson/PA Wire
The annual cost of heating and lighting a typical family home in Ireland is about €1,200 more than it was before the last general election. Practically every other household cost has risen too. Photograph: Niall Carson/PA Wire
Conor Pope's picture
Conor Pope
Tue Nov 26 2024 - 00:00

Most of the exit polls conducted after the US presidential election suggested that the money people had in their pockets as they went to vote – or more accurately did not have – played a key role in the re-election of Donald Trump.

Tens of millions of voters were apparently willing to overlook the Republican standard bearer’s many flaws in the hope that he would make everyday living easier for them.

While the choices facing the electorate here are nowhere near as extreme or existential as they were in the US – no one is suggesting any one outcome might imperil our democracy – people’s perceptions of what various parties can do for them when it comes to the cost of living are similarly front and centre.

It is hardly surprising given that so many people are so much worse off as a result of the crisis that is continuing despite a sharp decline in the rate of at which prices have been climbing in recent months.

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Inflation was at a three-year low of 0.7 per cent in October compared with more than 7 per cent at the height of the crisis, while grocery price inflation – which was almost 17 per cent in the summer of 2023 – is now less than 3 per cent. Energy prices have also fallen back from record highs over recent months while the European Central Bank has lopped more than 1 per cent off its interest rates since the summer.

The good news only goes so far, however, and while the price spikes of the past few years might be behind us – for now at any rate – that does not mean people are not suffering the consequences.

As a result of 10 successive interest rate hikes, close to 200,000 tracker mortgage holders are paying hundreds of euro more each month in loan repayments, while those on variable rates and coming off fixed rates as well as new borrowers are also paying more now than before the cost-of-living crisis began.

Renters, meanwhile, are paying anywhere from 5 to 10 per cent more now than they were a year ago, a rise that adds at least €1,000 a year on to already sky-high rents.

The cost of food remains far higher than on the last occasion the country went to the polls in early 2020 and although grocery price inflation has steadied, there is no suggestion from any quarter that prices will fall back to where they were four years ago.

A household that spent €200 a week on groceries in 2020 is almost certainly spending at least €240 now, an annual increase of nearly €500.

The other area where we have seen desperate price volatility has been energy. The annual cost of heating and lighting a typical Irish home was about €2,000 before the last election and climbed to twice that in the aftermath of Russia’s invasion of Ukraine in the spring of 2022.

A settling of energy prices on global markets since 2023 has seen domestic energy prices fall back but the cost of heating and lighting a typical family home remains about €1,200 more than it was.

There have been many other price hikes, including fuel prices and health insurance.

Motorists now pay at least 30 cent a litre more for fuel than in early in 2020, adding about €300 to the annual cost of motoring for many. The higher cost of health insurance has added another €500 on to many households’s outgoings over the same period.

Clothes cost more now, entertainment costs more, holidays cost more, streaming services cost more. In fact, it would be hard to find anything that costs less now than it did in early 2020 and when the price spikes due to the cost-of-living crisis are totted up, many people are as much as €10,000 poorer now than they might have been. Of course, such a figure does not factor in any pay rises or tax cuts over recent years.

The outgoing government handled some elements of the crisis well, with energy credits worth more than €700 and rent and mortgage interest credits worth about the same. It has failed miserably in other areas – notably in the grocery sector where bullish talk emanating from the Department of Enterprise in the summer of 2023 amounted to little more than an overpriced hill of beans.

All parties make promises in the final days and weeks of an election campaign. Whether they will make any difference is the big question.

Product price changes 2020-2024

Milk (1l): then 75 cent; now €1.15

Bread (800g): then €1.70; now €2

Domestic energy (annual): then €2,000; now €3,200

Petrol (1l): then €1.42; now €1.74

Tracker mortgage (monthly): then €1,150; now €1,450

Rent (Dublin, monthly): then €1,758; now €2,128