Mabs (Money Advice and Budgeting Service) offices are busy this summer as many more people struggle to make ends meet at home
Summer months are usually a bit quieter for staff in Mabs (Money Advice and Budgeting Service) offices around the country, but this year bucked that trend.
More callers are looking for help to manage their finances, even if bills are usually lower in the summer months — the heating can be switched off and children are on holidays so less is spent on petrol for the school run. But this year, the lull that Mabs national spokesperson and North Leinster regional manager Michael Laffey usually sees at his office in Navan every June and July never materialised.
“We have been way busier than we would normally be,” he said. “People are just being caught by the higher cost of living and electricity prices.
“One manifestation of that is we are having to redraft budgets for people six months after first doing them — something we wouldn’t have had to do previously unless somebody’s circumstances changed, such as losing income from a job or a medical expense.”
A Sunday Independent survey of Ireland’s major supermarkets shows how much price increases bit consumers over the past six months. Mr Laffey said this is a factor in why people are seeking support.
Food prices have changed drastically since Russia invaded Ukraine because it has led to increased input costs for fertiliser, fuel and materials used to produce and transport goods.
The survey shows a sliced pan can cost 45pc more than it did six months ago depending on preference and where food is bought. If butter is needed for the bread, it could cost double what it used to.
Six months ago the Sunday Independent reprised a Consumer Association of Ireland shopping basket survey of supermarkets from 2012. The basket of 19 goods cost €5 more last February than it had 10 years before.
Now, six months on, the cost of the same basket has increased by another €2.31.
Digging deeper, the survey shows some packaging has changed. When this is accounted for, the basket is €3.31 more expensive now than in February.
TU Dublin retail management lecturer Damian O’Reilly said these increases can partially be attributed to “shrinkflation”, where producers juggle rising input costs.
This is leading to changes with some products. They can be smaller, as with the popular Cadbury Dairy Milk chocolate bar. In the last survey a 200g bar cost €2.50 on average. Last week the 200g bar was not on supermarket shelves we visited, but 110g and 180g varieties were advertised. The 110g bar was most widely available, priced at €1.66 on average. When adjusted to account for the product change, the bar costs 21pc more now.
“Shrinkflation is partially happening because the price of cocoa beans has gone up about 70pc in the last 18 months. Part of this is due to climate change, where it is more difficult to harvest the product and the quantities produced are not as great. It is too hot in some areas it was previously grown in, so they are planting further up into the mountains which adds to transport and production costs,” Mr O’Reilly said.
Increased global demand for chocolate also puts pressure on commodity prices.
Other changes are happening on the shelves too.
For example, Kellogg’s Corn Flakes were sold in 450g boxes last February but are now being sold in 500g packs.
“What some companies do is they reinvent their product, so the packaging might change as well as the price,” Mr O’Reilly said.
“It might look like a new product but it is just a different size. They are not making exceptional profits here, it is just the commodity prices, input, transportation and labour costs have all gone up, so you are going to see this really kicking in the next six months. Products being sold for harvest in six months’ time won’t have their prices kick in for several months so we can see prolonged inflation coming up to Christmas.”
He believes consumers will need to adjust and look at more seasonal, local products instead of chasing cheaper foreign imports.
“We need to get around to the idea that low-cost food may be at an end. We need to look at how we consume products. We need to look at where it is all coming from, the air miles associated with it, and realise that we are going to have to pay more for what we consume,” he said.
“Generation Z (born after 1997) seems to care more about sustainability, loyalty, and looking at where everything is coming from, so I think we will see a shift and change.
“Price compression has happened over the past 20 years and food got cheaper because production and logistic methods improved. But once you get a blip, like Covid, it puts global systems under extreme pressure. We have to reassess where we get things from.”
The supermarket increases tally with hikes elsewhere in the economy.
An analysis of the CSO figures released last week show electricity costs jumped (20pc) in the past six months.
Home heating oil increased by 49pc since February, while natural gas increased by nearly a third (31pc). Petrol (19pc) and diesel (25pc) also saw significant hikes.
Food bills rose by 14pc in the same period, according to the CSO, with much of this concentrated on milk (14pc), butter (11pc), bread (10pc) and meat (9pc).
Mr O’Reilly and other experts expect inflation to continue. This is a global trend; earlier this month the Bank of England forecast inflation could hit 13pc there in the coming months because of how Russia’s invasion of Ukraine will continue to affect gas prices.
However, Mr Laffey said there are often ways people can find savings when they seek support.
He said Mabs’ free money advice services will often look at streamlining subscription service costs, keeping up to date on discounts applied to bills and shopping around for a bargain.
“We try and point out to people they might have to go to two or three shops, if they are available to a person near where they live, when doing the weekly shopping. You might find the fruit and veg is better value in one chain and other foods are cheaper at another chain store. It might mean going to two or three shops if you have the options and choice in your local area.”
Mabs, which offers free money, budgeting and debt advice, can be contacted on 0818 07 2000.