Friday 23 August 2019

Revealed: Most people 'believe prices rising twice as fast as they really are' - CSO

Stock image
Stock image
Charlie Weston

Charlie Weston

Most people are convinced that prices are increasing far faster than official figures indicate.

New data from a survey carried out by KBC Bank shows that the most common view is that inflation is rising at twice the level captured by the Central Statistics Office (CSO).

This is particularly the case for older people. Older age groups spend more in areas where prices are rising - housing, heating, health insurance and other medical services.

The most recent CSO official figures show the annual rate of inflation fell back to 1pc in May.

This was a reduction from the seven-year high of 1.7pc in April.

CSO statisticians said consumer prices fell by 0.1pc on a monthly basis in May.

Older age groups spend more in areas where prices are rising – housing, heating, health insurance and other medical services. Stock image
Older age groups spend more in areas where prices are rising – housing, heating, health insurance and other medical services. Stock image

But the prevailing view among consumers who were surveyed is that prices of goods and services are rising much faster than that. They feel prices are going up between 2pc and 5pc.

Some 33pc of consumers feel prices are rising, but 31pc say they are falling or staying the same.

KBC Bank chief economist Austin Hughes said: "On average, Irish consumers feel their personal inflation rate has been around 1.9pc over the past 12 months - that's almost twice the latest official inflation rate."

People under the age of 35 perceive prices to be rising at a slower rate than other age groups.

Those between the ages of 25 and 54 think prices are going up by 1.9pc a year. But the over-55s said they see the cost of living going up by 2.5pc.

Mr Hughes said the variation in perceptions among different age groups could be down to the fact that younger people buy different products to older consumers.

Young people are focused on the price of electronics, clothing and travel. Prices of these goods and services have fallen lately.

However, older people tend to spend more on fuel, housing and medical services.

Health insurance costs have gone up with the end of the price war, while the main energy players have all increased the cost of gas and electricity.

Older people spend money on restaurants and hotels, with prices affected by the return of the VAT rate to 13.5pc.

Mr Hughes said: "Of course, another consideration is that younger age groups (with lower average incomes) may be more price-sensitive in their purchasing and more able and willing to use time and technology to search for bargains."

The survey comes as recent Eurostat figures found food prices in this country are among the highest in the EU, with prices for food and alcoholic beverages 20pc higher than the EU average.

Irish Independent

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