Friday 24 November 2017

Cost of living: More lose than win at the end of month

Nick Webb and Roisin Burke examine the results of the latest Sunday Independent/KBC Bank Cost of Living survey and find that the different groups in society have fared very differently indeed

Cost of Living
Cost of Living

Nick Webb and Roisin Burke

When Enda Kenny came to power in March 2011, it was a period of great promise. Ireland was going to be changed. Changed for the better. But we have all got poorer instead, as taxes rose and bills increased. So who has suffered most from the rising cost of living? And who is getting away almost scot-free? In the latest Sunday Independent/KBC Cost of Living survey, we profile the winners and losers as money remains tight.

The squeezed middle - up 7.9 per cent

The squeezed middle is being absolutely pounded from every side. Their cost of living has risen by a staggering 7.9 per cent since the Fine Gael/Labour Government took charge. It's hardly any surprise that despite having decent jobs, they still have no money left at the end of every month.

Household bills are the killer, with payments for health, car or home insurance going up by 19.2 per cent over the last three years. Given that these bills take up such a sizeable chunk of monthly outgoings, the hit is proportionally larger than in other categories.

Education bills are also clobbering the cash-strapped taxpayers of middle Ireland, with costs rising almost 20 per cent since 2011. Given that there's no chance that young Charlie or Harry will ever get into the law firm if he doesn't go to Blackrock or St Michael's, this is a bill that can't be avoided. Or so they think.

While money is savagely tight, there are still standards to be upheld. But the holiday to Tuscany or the Dordogne is getting hugely dearer, with prices rising 12.1 per cent in three years.

Eating and drinking out is also dearer, rising 4.2 per cent. Other unpleasant hikes include gas and electricity, fuels and government charges.

On the plus side, mortgage costs have fallen as have clothing bills, so the Hollister hoodie or the Vans sneakers for the tweens are now that bit cheaper, with costs down 5.8 per cent.

Pensioners - up 4.2 per cent

Pensioners won't forget when it comes to election time. Their weighted cost of living has soared 4.2 per cent since the establishment of the new Government in 2011.

Energy costs represent the biggest hit to their incomes. Electricity, gas or fuel costs made up about 15.5 per cent of their outgoings with bills rising 15.5 per cent over the period. Just wait for water charges.

Tobacco and alcohol prices have risen with cigarettes up nearly 13 per cent in three years and a drop of sweet sherry rising 0.4 per cent.

While food prices did fall for the first two years of the new Government, prices are now pancake flat.

However, some items such as crisps have risen sharply – by 7.2 per cent in the last month alone. Buying a new cardigan or pair of slacks is also marginally cheaper, with prices down 5.8 per cent. Other improvements for pensioners in the Sunday Independent/KBC cost of living survey include falling prices for household maintenance and appliances.

The young family- down 2.4 per cent

They aren't on the crest of a recovery wave but young marrieds with children seem to be treading water and surviving – although anyone at the coalface, feeding and clothing a young family, would probably say the key word is 'surviving'.

Over the last three years, their costs have actually dropped by 2.4 per cent. That's thanks mainly to decreases in the mortgage interest rates that eat into young homeowners' family salaries to the tune of 20 per cent. They have fallen by over 20.3 per cent since 2011.

And thankfully other key costs have stayed flat or fallen, such as the price of clothes and shoes, which is down by 5.8 per cent, making the uniforms and runners and tracksuits which kids grow out of every five minutes a small bit more affordable.

Childcare has crept up though, and the cost of car and health insurance rose by a massive 19.2 per cent. Weetabix and Cheerios are a little cheaper as the price of breakfast cereals has fallen by 1.4 per cent over the last year.

The cost of that cheering glass of wine that keeps you sane after you get the kids to bed has gone up, with the price of alcohol rising by a sobering 10 per cent on three years ago.

The benefits recipient - up 4.3 per cent

If you're not working and are down to the basics, at least the sting of keeping fed has stayed steady and the cost of keeping a shirt on your back has fallen. But the price of keeping a roof over your head has soared.

Food and drink outlay stayed flat for people on social welfare and the cost of shoes and clothes fell by 5.8 per cent. Rent, however, which makes up more than 10 per cent of spending, shot up by close to 15 per cent since 2011.

And gas, electricity and fuel bills for benefits recipients have soared by 15.5 per cent in the three years since Enda was elected.

The Middle classes - down 0.2 per cent

The professional classes are doing rather nicely out of Enda's Government – despite the property and water taxes. Their weighted cost of living has fallen by 0.2 per cent in the last three years.

The big pad in Sandymount may still be in savage negative equity but at least the mortgage payments are miles cheaper, with mortgage interest costs down over 20 per cent in the last three years. Given that this accounts for over 20 per cent of monthly outgoings, the savings have a big impact on the household budget.

The cost of a 142 reg Beemer or Audi may also be less painful, as vehicle costs are down 7.6 per cent over three years. A truly mega Godzilla-sized telly is also way cheaper, with the cost of electrical goods falling 23.6 per cent.

The big hit for these wealthy families is the rising cost of education. School fees and other education bills have risen 19.8 per cent in three years. With a good private school costing at least €5,000 a year, this will hurt. Nipping up to the new Michelin star restaurant could also be a little dearer, with eating out costs rising 4.2 per cent. Insurance bills have risen too. It's worth noting that getting a spot of cosmetic surgery or botox is up 0.2 per cent in the last 12 months.

The renter - up 7.3 per cent

It's a landlord's market, with people who want to buy and can't bottlenecking the stock of rental accommodation and prices spiralling upwards – by 14 per cent in Dublin in just a year and 9 per cent as a national average, according to rental site daft.ie.

Renters have paid almost 15 per cent more to keep a roof over their heads in the last three years on average, our survey shows, but possibly have paid even more for something that isn't out in the Boondocks with a bus passing by every two days.

It's getting a little pricier to escape that swirly carpeted shoebox you're paying through the nose for: eating out and going to the pub is costing more – 4.2 per cent more in the last three years. You could always stay in and read a book: the cost of books and newspapers fell by 0.8 per cent. Chocolate has fallen by 2.7 per cent over the last year.

The stay-at-homers - up 0.4 per cent

The 20-and-30somethings who still live at home with their parents haven't suffered too badly, with their weighted cost of living rising by 0.4 per cent since 2011.

Not being burdened by mortgage or rental costs, many of these stay-at-homers have higher levels of disposable income. This means that increases in the price of holidays (up over 12 per cent) or heading down the pub or nightclub (up 4.2 per cent) will be felt in the pocket. Catching the upcoming X-Men blockbuster will also be dearer as cinema admission costs have risen by 1.8 per cent over the last year alone.

However, cheaper communication bills – using whatsapp or twitter rather than texting – have made a difference. Buying a new Vespa or a hipster fixie is also more affordable, with vehicle costs falling 7.6 per cent.

The first-time buyers- down 7.0 per cent

Those lucky enough to be able to buy a home are seeing the upside from recession carnage even beyond discounted house prices as this profile of people surveyed have seen their overall costs drop by 7 per cent since 2011. This is the biggest drop in the cost of living for any of the categories in the Sunday Independent/KBC survey.

Mortgage interest costs, far and away their biggest single expense, slid down for this group by more than 20 per cent in the last three years.

Kitting out that brand-new dream home is far more doable, with furniture costing 19.6 per cent less and appliances like washing machines and dishwashers costing 6 per cent less than they did a year ago, the survey shows, and slightly less in three years.

Home bills are inching upwards though – electricity and gas now cost more than three years ago by 15.5 per cent. Staying in to watch Borgen or Modern Family is dearer with TV bills rising 4.9 per cent over the last year alone.

Getting to work on public transport is a shocking rising cost, up by almost 25 per cent more since 2011 for bus and rail fares.

The politician- down 1.5 per cent

Politicians – they're just like you and me. And a big wodge of a politician's €8,333-a-month Dail salary goes towards mortgage payments, with mortgage interest making up almost 20 per cent of your political representative's costs. But that has fallen by over 20 per cent since the last election in 2011.

The price of the entertainment that might go with pressing the flesh pre local election, for example, has dipped a smidgeon, by 0.8 per cent in a year. Entertainment spend is a hefty 15 per cent of a politician's costs, our survey reveals, and that doesn't include restaurant and pub spend, to which 18 per cent of a political animal's costs go, up 4.2per cent since the last election.

A pint, whether in the Dail bar or the local, has risen in cost overall by a choking 10 per cent since the regime change in 2011.

Sunday Indo Business

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