Sunday 26 January 2020

Low-paid workers under pressure as motor insurance and home rental costs spiral

Some good news: petrol priceshave fallen
Some good news: petrol priceshave fallen
Charlie Weston

Charlie Weston

Increases in the cost of rents and motor insurance have picked up pace, putting massive financial pressure on low-paid workers.

Figures from the Central Statistics Office (CSO) show overall prices fell in March, but there were huge hikes in the cost of insuring a car and renting a home.

General prices were down marginally, by 0.3pc, in the year to March. This was mainly due to lower fuel prices, as wholesale oil prices have collapsed.

But the cost of insuring a car has jumped by 32.6pc over the past 12 months, the highest increase recorded by the CSO in recent years.

This means that a policy that was €500 last year now costs €663. Motor insurance rates have been rising because of under-pricing by insurers in the past, new rules requiring more reserves to be put aside, elevated personal injuries awards and lower investment returns. These costs are being passed on to motorists, with some drivers being asked to pay 50pc more for cover.

Home insurance rates were up 9.5pc in the year to March, with health insurance premiums 3.4pc dearer over the last year, the statisticians said.

There was a surge in rents. People in private rental accommodation saw the cost rise by 9.2pc in the year to March, the CSO found. Rents are rising as there is a chronic shortage of properties, despite moves by the Government to bring in rules imposing a two-year freeze on rent rises.

Rents have risen by 40pc since they hit a low in 2010, according to Philip O'Sullivan, an economist with specialist bank Investec.

Some food prices are on the rise. Potato prices were up 14.1pc year on year, rice was up 2.4pc, with pasta up 2.8pc, according to the CSO data.

However, there was some good news in the consumer price index figures from the CSO.

Transport costs fell heavily, due to lower petrol and diesel prices, and there was a fall in air fares and a reduction in the price of cars. This was partially offset by an increase in bus and taxi fares.

Housing costs were also down, mainly due to lower mortgage interest repayments and a reduction in the cost of home heating oil. There was also a small decrease in the price of electricity and gas, which was partially offset by higher rents.

Education costs rose, primarily due to the hike in third-level education fees. The student contribution for this academic year is €3,000.

Irish Independent

Also in Business