Price-hike shame of professional classes
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What a refreshing change it makes to see prices falling. For six months in a row now prices have been dropping -- a phenomenon we have not experienced in this country since the 1930s.
The latest inflation figures for June show that prices fell by 0.3pc compared with May. This has left the annual rate down 5.4pc, according to the Central Statistics Office (CSO).
This was the largest fall since 1933, according to Goodbody economist Deirdre Ryan.
Falling mortgage interest payments were the main source of the downward pressure on inflation in June.
The European Central Bank has cut interest rates seven times since last October, benefiting homeowners who have variable rate and tracker mortgages.
The fall in mortgage rates has meant that households have saved €5,300 a year on a €250,000 mortgage in the last eight months. Also falling are the prices of food, energy and clothing.
But large elements of household weekly spending are not benefiting from the general fall-off in prices.
Despite the recession, despite the unprecedented tax hikes, despite substantial job losses, there are still a number of sectors in the economy continuing to coin it at the expense of the consumer.
And nowhere is this more true than when it comes to the State itself. Services provided by government bodies continue to buck the trend of falling prices.
Education and health services are two cases in point. But also included in the list of shame are insurers, doctors, lawyers, petrol retailers and airlines.
One of the most glaring examples of brazen price hiking at a time of an unparalleled squeeze on spending is to be found in the insurance industry.
Home and contents insurance has jumped by almost 25pc in the past year, while motor car insurance is up an incredible 13.4pc.
Insurance companies have been itching to hike premiums for ages but intense competition in the past few years meant that they were forced to discount prices to stop their competitors eating into their market share.
The fact that Quinn Insurance is no longer undercutting its rivals has released it competitors to go on a price-rising spree.
Insurers offer up a range of reasons why premiums are set to rise.
With a downturn you get more claims, especially fraudulent ones; lawyers, they say, are pursuing injuries claims with greater vigour; and investment returns have declined so greater profits have to be generated from higher premiums.
Of course, what the insurance companies are less eager to tell consumers is that they are benefiting from a couple of huge changes in the market.
The introduction of the Injuries Board in 2004 has largely excluded lawyers from the claims process and is now delivering savings of €100m a year.
And the anti-fraud campaigns by the Irish Insurance Federation have reduced bogus claims. Despite these changes the cost of insurance is still heavily influenced by another of our old high-charging friends -- lawyers.
Litigation fees are still a big part of premium costs even though two-thirds of compensation cases are resolved through the Injuries Board.
The CSO inflation figures do not break out any specifics for changes in the cost of legal services. Instead, lawyers' fees form a part of what the CSO calls "other services" which rose by 2.7pc in the year.
The news that the State Claims Agency is concerned that lawyers are soaking up 56c in every euro paid out in compensation in medical negligence compensation cases brings the issue of legal costs into sharp focus.
Those kinds of huge legal costs feed through into general health costs, another area where prices are rising in the past year.
And hospital services have risen sharply this year, with the huge hike in the salaries paid to hospital consultants bound to be a major factor here. GP fees are also up on the year.
This journalist was surprised recently to be charged €50 by a doctor for a minor medical procedure -- the same price the GP charged before we were all crunched.
The interlinking nature of the fees charged by professionals and the cost to the consumer is also discernible from the current dispute between the HSE and the pharmacists.
The profit margin on medicines in this country is regarded as being one of the highest in the EU, according to the Competition Authority.
Pharmacists earn a profit margin of 50pc on private prescriptions.
In other words, a pharmacist will have paid a wholesaler €30 for a medicine, but gets to charge a customer €45 for the prescription.
The dispute centres around another attempt by the State which, in one form or another, ultimately ends up paying for 80pc of medicines in this country, to extract better value for its medicines bill.
We could do with some cost control when it comes to other services provided by the State. Education is another area where prices are rising, according to the CSO figures.
Parents preparing their children for their return to school are only too aware of this as they are having to shell out a small fortune on books, uniforms and contributions to schools at the moment.
Providers of state services, along with insurers and the professions, need to wake up to the fact that people are not spending, so the prices charged need to fall, not rise.
