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Irish Consumer Prices 18% Higher Than EU Average
 
# 1 : Friday 20-6-2014 @ 13:54
 
 
Even after six years of austerity, consumer prices in Ireland are on average 18 per cent higher than the European Union norm, prompting renewed concern about the country’s competitiveness.

According to figures from Eurostat, Ireland is considerably more expensive than most of its European neighbours when it comes food, alcohol, restaurants, hotels, transport and electronic goods.

The figures, which are based on data from last year, ranked Ireland as the fifth most expensive of 28 member states, behind Denmark, Sweden, Luxembourg and Finland, with prices estimated to be 118 per cent of the EU average.

This placed us ahead of countries like the UK, France, Germany and Spain.

Despite the country’s large agricultural sector, the price of food and non-alcoholic beverages here was 17 per cent higher than the average.

In terms of alcohol and tobacco, Ireland ranked as the most expensive state in the EU and by some way, with prices 78 per cent higher than the average.

However, the study noted the large price variation in this category reflected, in the main, differences in taxation.

The Drinks Industry Group of Ireland called for the reversal of excise duty on alcohol, saying the “unfair” excise rate was a tax on jobs, tourism and consumers.

The cost of restaurants and hotels in Ireland was found to be 28 per cent above the average, placing Ireland third behind only Sweden and Denmark as the most expensive place to stay and eat out.

Ireland was also ahead of the norm in terms of the cost of personal transport equipment (111 per cent) and when it came to consumer electronics (105 per cent).

Clothing was the only category in which prices here were found to be below the average, in this case by 2 per cent.

Alan McQuaid, economist with Merrion Stockbrokers, described the figures as disappointing, especially as the only countries with higher prices than Ireland were the traditionally tax-high states of Scandinavia and cash-rich Luxembourg.

“We were a lot closer to the EU on the prices front at the height of the crisis, though we were higher on average at the height of the boom.”

“The data highlight that Ireland is in danger of becoming uncompetitive, charging more for its goods than other EU member states.”

Mr McQuaid said higher taxes were clearly a factor, noting the VAT and excise duty hikes that were implemented as part of the fiscal austerity process.

“With an increase in corporation tax being ruled out, and little scope left for income tax hikes, then the only option left is indirect taxes, which of course add to prices.”

“The other key issue which these figures highlight is the underlying cost for retailers - eg rents, insurance and wage costs - are higher than elsewhere. You cannot look to have one of the highest minimum wages in Europe, and then not be surprised that prices are more expensive than the rest of the bloc.”

Whatever about wages, he said the Government need to address the issue of high insurance, rents and other administrative costs.

“Overall, the figures are no great surprise and despite the low headline annual inflation rate, should be a reminder to policymakers not to rest on their laurels and take things for granted.”

Recent consumer price data from the Central Statistics Office showed suggested annual inflation was running at just 0.4 per cent in May.

A breakdown of the figures showed, however, the cost of renting a home rose more than 20 times faster than the average level of inflation over the past 12 months.

http://www.irishtimes.com/business/sectors/retail-and-services/ir etc ...

The 78% price difference of alcohol and fags is shocking. No wonder people are vaping and the bars are shutting down all around us.
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# 2 : Friday 20-6-2014 @ 14:05
 
 
I love my 49 cent cans of beers which I can drink everywhere since we don't have those stupid "no public drinking" laws.

Don't forget however, Thomas, that Irish salaries are way above average and income tax is very, very low compared to most European countries.
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# 3 : Friday 20-6-2014 @ 14:10
 
 
It will be interesting to see how this is responded to. The article quotes a rep from the drinks industry calling for lower duties on booze.

I expect some of it will be attributed to multinational retail bussineses charging Irish shoppers more because they can.

Some of it will be blamed on the cost of tranporting goods to Ireland, although that principle would mean that prices in, say, Inverness, would be higher than in Oxford or Essex, which is generally not the case.

Will any of the discussion focus on the cost of renting commercial property in Ireland? That's the real killer, and government afdter government has bottled out of dealing with that system of extortion.
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# 4 : Friday 20-6-2014 @ 14:11
 
 
True, commercial rents are insane!
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# 5 : Friday 20-6-2014 @ 14:12
 
 
I think our supermarket prices for alcohol are ok and wouldn't want them to be rock bottom - its when you step into a pub or restaurant that it becomes another story.
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# 6 : Friday 20-6-2014 @ 18:17
 
 
Someone said :
I think our supermarket prices for alcohol are ok and wouldn't want them to be rock bottom - its when you step into a pub or restaurant that it becomes another story.

Theres also a Dublin premium as well
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# 7 : Friday 20-6-2014 @ 18:34
 
 
Factors influencing it (imho):

- upward only rent reviews?
- highest electricity salaries in EU.
- legal costs passed onto consumers.
- Law Society/Bar Council monopoly on legal qualifications. Self-regulation doesn't work.
- Indirect taxes
- possibly the inclusion of interest rates in the CPI which is very unusual in the EU.
- Dublin Bus monopoly on public transport there
- Punitive forced cross-subsidisation (of VHI) by new entrants to health insurance market gives VHI little incentive to cut premia.
- Inadequate reduction in drug prices despite compulsory generic penetration. I've heard of 20% drops where it should be more like 80% going on experience in the UK. For example Lipitor.
- a big one by all accounts. Childcare costs are amongst highest in the world. Fattened by government subsidies creating an artificial bubble.
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# 8 : Saturday 21-6-2014 @ 07:22
 
 
I think the food variation is the hardest one to grasp, considering we produce it here.
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# 9 : Saturday 21-6-2014 @ 07:47
 
 
maybe they should charge more on shop bought booze and lower the taxes on pub and restaurant bought booze to make buying drinks out more appealing. I think the other thing this shows is that there is still so much cash in the country, loads and loads of people were still fine with paying over the top prices for restaurant food and booze so there was no incentive to lower prices.
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# 10 : Saturday 21-6-2014 @ 09:29
 
 
Someone said :
I think the food variation is the hardest one to grasp, considering we produce it here.

Doesn't stop the IFA campaigning against supposed low supermarket prices.
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# 11 : Saturday 21-6-2014 @ 09:54
 
 
Maybe we need some sort of co-operative supermarket buying direct from farmers at a fair price and selling it at just enough margin to cover costs.
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# 12 : Saturday 21-6-2014 @ 10:16
 
 

Someone said :
Factors influencing it (imho):
- Inadequate reduction in drug prices despite compulsory generic penetration. I've heard of 20% drops where it should be more like 80% going on experience in the UK.

That would not be a primary casue, per se. The question I would ask is why is that the case - where is the additional cost going? Is it because pharmacies have to pay higher rents in Ireland than in other countries? Is it because they are taking a higher rate of profit on generic drugs than their counterparts in other countries are? Is it because suppliers of generic medicines are charging Irish pharmacies more than they charge UK (or Danish or German) pharmacies?
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# 13 : Saturday 21-6-2014 @ 10:20
 
 
Someone said :
Factors influencing it (imho):

- a big one by all accounts. Childcare costs are amongst highest in the world. Fattened by government subsidies creating an artificial bubble.

The first part of that is true, the second false. The problem is that the government subsidy is not fat enoug to ensure anybody who wants childcare can have it without a fee to the provider, as is the case with primary schooling, and is the case is a number of other EU countries.
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# 14 : Saturday 21-6-2014 @ 13:44
 
 
What does electricity salaries have to do with it?
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# 15 : Monday 23-6-2014 @ 09:13
 
 
Someone said :
Doesn't stop the IFA campaigning against imagined low supermarket prices.

In fairness, the IFA campaign about the low prices farmers achieve for their produce from supermarkets, not low prices on the shelf per se . The fact is that those supermarkets that trade in more than one jurisdiction often don't tell you the profit margins they achieve in different countries, but it is suspected, and with good reason, that they achieve higher margins in Ireland than they do elswhere.
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