Friday 30 September 2016

The reality of price rises is at odds with official figures

Published 30/08/2015 | 02:30

A basket of basic household staples bought in supermarkets has gone up in price by almost €10 since before the recession hit back in 2007
A basket of basic household staples bought in supermarkets has gone up in price by almost €10 since before the recession hit back in 2007

We are told that we are living in deflationary times, with the price drops on most goods and services making our money go further.

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The official inflation figures for this country show that prices in the 12 months to July fell by 0.2pc. There were general price falls in the previous months too, according to the Central Statistics Office (CSO).

So, be happy. Life is good. It is getting cheaper to live. Deflation is good for us.

Well, price falls are not what is happening with motor insurance, house prices, rents, health insurance and education costs.

Some of these important expenditure items are experiencing double-digit price growth.

Motor insurance premiums shot up 20pc in the past year, according to AA Ireland. This largely wiped out gains from lower prices at the pumps for petrol and diesel.

The cost of the student registration fee will be €3,000 this year, up from €2,750 last year.

Rents are rising at an unsustainable rate of 10pc a year.

And then there are grocery prices. Yes, we have a competitive retail sector with shops vying with each other to offer lower prices on essentials and sometimes giving us reductions on luxury items.

The CSO says food and non-alcohol beverages prices are down 2.4pc in the past year.

But the reality for families is that grocery prices have been shooting up for householders.

A basket of basic household staples bought in supermarkets has gone up in price by almost €10 since before the recession hit back in 2007.

The same basket has seen some items rise by more than 70pc in the past 15 years.

A supermarket basket survey carried out by the Consumer Association of Ireland found that the average cost of 19 commonly bought items now stands at €42.89.

The same basket before the recession in 2007 cost €33.30.

In 2000, it would have cost €29.84, a difference of €13.05, or 44pc.

This is despite the CSO saying that the average change in prices over the past 15 years should stand at 34pc.

When items that are now sold in different-sized packages are taken out, there has been a spate of sharp price rises.

There is no suggestion here that the CSO figures are cooked.

It is just that the lived reality for consumers is often rather different to that captured by official inflation figures.

Maybe it is time our CSO statisticians looked again at why they say prices are falling overall, when many feel the opposite is the case.

Sunday Indo Business

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