Ireland pays price as rip-off capital of EU

IRELAND’S reputation as rip-off capital of Europe has been cemented by a damning report which shows we pay the most in the EU for food, beverages, tobacco and rented accommodation.

The National Competitiveness Council (NCC) Statement on Prices and Costs shows the average price of goods and services for Irish consumers has increased by 22% more than for our EU neighbours over the past four years.

The report highlights how Ireland is the most expensive of the 12 eurozone countries for food, non-alcoholic beverages, tobacco and rent. Eating out and drinking out are the second highest in the eurozone.

The report blames soaring inflation on domestic factors - particularly in the non-traded services sector such as restaurants and pubs as well as services provided or regulated by the State - rather than the rising cost of imported goods.

It also warns similar high inflation rates for labour costs are threatening the competitiveness of the economy. Irish salaries are 10% above the EU average.

It says Ireland’s deteriorating cost base has already undermined the ability of many companies to compete in international markets. The NCC warns that more significant job losses and a decline in living standards could occur, if the decline in cost competitiveness is allowed to persist.

“Inflation, together with the growing risk of a further sharp decline in the value of the dollar against the euro, make this outcome all too possible,” says the report.

It also shows that Irish inflation has outpaced the EU and eurozone rate for seven consecutive years.

Since 1999, overall prices in Ireland have increased by 17.5% - over twice the average EU rate of 8.4%.

The NCC said it was clear that the cost of goods such as beer and cigarettes were “significant drivers of domestic inflation”.

Soaring prices charged by restaurants and pubs alone account for 25% of all inflation over the past five years with the other main contributors being alcohol and tobacco (13%), housing, water and fuels (11%), recreation and culture (11%) and food and non-alcoholic beverages (10%).

One of the few positive notes is that Ireland is cheaper than every other eurozone country for clothing and footwear.

NCC chairman William Burgess said the report confirmed the widely-held belief that Ireland was an expensive location for both businesses and consumers.

“The gap between here and elsewhere in Europe is not justified by economic fundamentals,” he said.

Fine Gael enterprise spokesman Phil Hogan said this represented the final proof that the Government was the main culprit behind “rip-off Ireland”.

Mr Hogan said the seven consecutive years of Irish inflation rates being above the EU average mirrored the period that the Fianna Fáil-PD Coalition had been in power.