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  • Writer's pictureBlue Sky Insurance

The real cost of living soars: Massive hikes in household essentials see working families worst hit

  • Worst hikes hit squeezed middle

  • Essential bills outstrip inflation

  • Donohoe feels Budget pressure

Families with children have been hit by a huge increase in the cost of living in the last five years, according to a Sunday Independent analysis of the CSO consumer price index.

There have been massive hikes in health and motor insurance, household utility bills, public transport and third level education fees and accommodation far in excess of the nominal rate of inflation, the study finds.

And the increases are having a serious impact on household budgets, particularly among squeezed middle-income earners.

While the cost of food has decreased between 2013 and 2018, many other household costs have soared dramatically in that time.

The rate of annual inflation currently stands at 0.7pc, but in the five-year period, the rate was 1.39pc.

Today's study shows that in the five years to last August the cost of essential items - effectively the real cost of living - has risen dramatically. The increases are particularly evident in certain areas: rent is up 44pc, overall insurance is up 18.7pc, household utility bills are up 10.2pc, rail transport costs are up 15.9pc, education costs are up 17.7pc and GP visit fees are up 8.3pc.

Even the cost of non-essential items has risen: alcohol in pubs is up 10.2pc, cigarettes are up 29.6pc; club and society subscriptions are up 13.1pc while the cost of books is up 10.6pc and a cinema ticket is up 5pc. Hotels, B&Bs, guest houses and hostels are now 33.5pc more expensive.

Figures released by the Central Bank last week suggested that Irish household wealth is higher than it was during the Celtic Tiger, mostly property related, but for a large proportion of working families, that wealth is not evident in the amount of money they have left when they have paid the monthly bills.

The figures show families with children in second or third level education and families in rental accommodation have been hit hardest in the past five years.

Economic and Social Research Institute (ESRI) research professor Kieran McQuinn told the Sunday Independent: "A lot depends on the household - if you are, for example, renting, then your cost of living is significantly higher than that of a household which is owner- occupying."

The figures show rents in the private sector have increased nationally by an average of 49pc and the cost of renting from local authorities has gone up by 13.7pc.

Education costs have increased by an average of 17.7pc in five years. However, these hikes are heaviest for families with students in private secondary schools or colleges and universities.

Second level fees are up 11.4pc since 2013. The cost of sending a child to third level has jumped 23.2pc in five years for bills covering tuition and accommodation. However, there is some good news today for parents whose children are in, or approaching, third-level education. There will be no change to third-level fees in this Budget.

A source close to Minister of State Mary Mitchell O'Connor yesterday said the Government would keep the registration fee at €3,000 while it is in office.

Today's analysis also shows that, while the cost of food, including meat, fish, vegetables, bread and other shopping basket essentials, has actually gone down, the price of a family meal in a restaurant has rocketed by 9.35pc.

And while it has become cheaper to take a flight to London or Paris, down by 12.9pc, it is far more expensive now to take an inter-city train or the Dart, with ticket prices up 15.9pc.

Buses and taxi costs are also up 8.1pc on average.

In a recent speech, Finance Minister Paschal Donohoe referred to the need to "tackle the cost of living". He is now expected to come under sustained pressure to give families a break in the Budget next month.

Fianna Fail is expected to concentrate on rising energy costs ahead of the Budget. It has been estimated that electricity prices have increased by €125 over the past 12 months alone, with average gas bills now coming in at €65 per month.

Fianna Fail's spokesperson on business, enterprise and innovation, Billy Kelleher, said Ireland's competitiveness was under attack from rising energy costs.

"The latest CSO figures show that rising energy costs are swallowing up last year's tax cuts," he said.

Traditionally, food shopping took up a substantial portion of family incomes. But compared with 2013, the average household spend on food products is down 10pc.

A pizza or quiche now costs 32.3pc less than in 2013, and a bag of potatoes checks in at 23.5pc less than five years ago. Essentials such as clothing, furniture and household textiles have also seen significant price drops, according to the figures from the CSO. But while this change has occurred, there have been steep price rises in other areas of consumer spending.

Beer prices in licensed premises have increased nationally by 9.8pc; a glass of wine is 9.44pc more expensive; and a measure of spirits now costs 11.65pc more than it did in August 2013.

Other social outlets are also more expensive, with figures showing the price of participating in or watching a sport has risen along with the cost of joining a club or society and paying for children's activities. On average, these cost 11.75pc more last month than in August 2013.

A rare treat, such as a stay in a hotel, also hits the pocket harder now, despite the introduction of a reduced 9pc VAT rate for the tourism sector in 2011.

Hotels, B&BS, guest houses and hostels are now 33.5pc more expensive. Finance Minister Mr Donohoe is under pressure to increase the tourism VAT rate to 13.5pc in the Budget.

"Within the different items, there appears to be a clear trend whereby goods, in general, are registering very small rates of price increase while the prices of services are growing at a much stronger rate," said Mr McQuinn.

"This may be due to a number of factors such as greater competition amongst retailers and the growth of online purchasing."

Keeping a car on the road also hits family incomes more heavily. Car insurance is now 34.8pc more expensive, with significant increases in health and house insurance premiums.

Homeowners are now spending an extra 16pc insuring houses, and a health insurance policy costs 13.7pc more compared with this time five years ago.

Mr McQuinn said the changing dynamic was a lingering legacy from the collapse of the Celtic Tiger.

"Given the pace of growth in the economy, one would expect a greater rate of inflation than what has been the case.

"This trait of low inflation despite strong economic recovery has been observed in other countries such as the UK and US until recently. It is probably a legacy of the significant financial crash of 2007 and 2008," he added.

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