It's a rip-off as many prices keep on soaring
Transport, education, health and childcare all costing more
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Friday July 10 2009
CONSUMERS are still being ripped off by inexplicably high prices for a range of basic goods and services.
They are being fleeced on the cost of vital public services like transport and health at the time they can least afford them.
Overall, prices in Ireland are falling faster than anywhere else in Europe, with the cost of living falling by 5.4pc in the last year, the sharpest drop since 1933.
But the latest figures from the Central Statistics Office (CSO) are a tale of two sectors -- most private sector prices are dropping, whereas many of those under government control are continuing to soar.
The discrepancy was most marked in the transport sector. Privately set air fares have fallen 14pc in the last year, yet when it comes to transport costs approved by the State, bus fares rose 11pc, taxi fares 8pc and rail fares are up 9pc.
These kinds of crippling and unjustified price hikes will "put Ireland on the road to ruination" if they are not tackled, Dermott Jewell of the Consumers' Association of Ireland said last night.
"To be fair to them, the private sector has been slashing costs because they know customers will go elsewhere if they don't, but then you take areas like transport where there's no real choice, and you see people being bled dry," he said.
Other areas where prices have bucked the downward trend are alcohol (+3pc), meals out (+1pc), insurance (+19pc), childcare (+6pc), education (+4.5pc), and hospital charges (+9pc).
Fine Gael accused the Government of ripping off consumers, with state-controlled prices soaring over the last 12 months, whereas prices fell for things outside of their control such as food (-3pc), clothing (-12pc) and furniture (-6pc).
Prices set directly by Government such as waste, hospital services, bus and rail transport, and education, increased by 5.1pc while prices set by government regulators such as energy, telecoms, and health insurance, rose by 9pc, said Fine Gael finance spokesman Richard Bruton.
"There are two completely different economies in Ireland -- the real world where companies are cutting prices and costs to sustain business and a parallel world controlled by the Government," he said.
The small and medium-sized business group ISME called for An Bord Snip's cost-saving measures to be introduced immediately on foot of public sector price increases which were crippling business.
"With the country on the brink there is no time for procrastination, long Oireachtas holidays or fudging the issues. Continued lack of action is an abdication of responsibility and a recipe for economic disaster," said ISME chief Mark Fielding.
The Restaurants' Association of Ireland (RAI) disputed the CSO finding that there had been a 1.1pc price increase in the cost of eating out over the last year.
Offers
"I would take those CSO figures with a pinch of salt. If you did a survey of restaurants, there's every kind of early bird and special offers on the table now. There's absolutely no way that prices have gone up over the last year," said RAI chief executive Adrian Cummins.
The Vintners' Federation of Ireland was unavailable for comment as to why drink prices have risen.
Overall, prices in Ireland have now fallen for the sixth month in a row and are back to a level seen in early 2007, according to the Consumer Price Index.
The CSO also released figures which showed that Ireland is seeing the sharpest price drops in Europe. Prices are rising except in Portugal, Luxembourg, Spain, France, and Belgium, and the average EU inflation rate is +0.7pc.
Economists are now predicting that Irish inflation will dip as low as -6pc by September as Ulster Bank economist Lynsey Clemenger said the latest fall had exceeded all expectations.
Lower mortgage rates continue to drive the overall price falls, with householders seeing a 46pc reduction in interest repayments since last year, while rents are down 16pc.
However, it is unlikely ECB interest rates will go any lower than at present, meaning monthly falls in inflation will be smaller than in recent months, and the annual rate is likely to average 4.2pc for the year, Ms Clemenger predicted.
Alan McQuaid, a Bloxham's economist, said the last time prices fell as steeply as the last six months was during the Great Depression.
While there were price increases last month with petrol, diesel, car and home insurance prices all rising, in the longer run "deflation remains a bigger threat than inflation" for the eurozone economy and for Ireland in particular, he said.
This was because falling wages and profits would raise the real value of existing debts and increase bad loans in banks.
He said because the private sector indebtedness is equal to around 175pc of GDP, "a period of deflation could have a particularly negative impact on the Irish economy".
A Department of Finance spokesman insisted the "Government has taken significant steps to reduce costs in the public sector".
- Aideen Sheehan Consumer Correspondent
