Families suffer as cost of living soars

Cash-strapped families face higher prices for everyday items like food and clothes as inflation rose three times faster than expected last month.

The CSO Consumer Price Index (CPI) jumped 0.6% in August, bringing the annual rate to 2%.

Ahead of a hairshirt budget in December, and following the recent announcement of a 8.5% hike in gas prices and a 5.9% rise in electricity from next month, economists have warned prices are likely to climb even higher before the end of the year.

The latest figures show the price of food, clothing and footwear, furnishings, household equipment and maintenance, transport and education have all gone up.

Basic foods saw some of the most dramatic price increases. The price of potatoes has jumped a stagging 17% in the last month and more than 11% in the past year. The combined effects of poor yields, due to a bad summer, and lower acreage is largely to blame.

Other foods like coffee (4.3%), confectionery products (3%), lamb and goat (2.3%), pork (2.1%), dried fruit and nuts (1.6%), fruit and vegetable juices (1.3%), tea (1.2%), breakfast cereals (0.9%) and baby food (0.9%) also saw price increases.

Clothing and footwear have also seen significant price rises, with the price of garments up 7.7%, shoes and other footwear (4.3%), other articles of clothing and clothing accessories (3%), and dry cleaning and laundry (0.4%). There were also price increases for diesel (4%), petrol (3.5%), other vehicle costs (2%) and air travel (1%).

The cost of education, while remaining unchanged for August, has increased by over 9.5% in the past year, mainly due to third-level education costs rising.

Prices for housing repair, maintenance, and water showed price decreases for August as a result of lower mortgage interest repayments. However, these were partially offset by increases in the cost of electricity, home heating oil, and gas.

Chief economist with Davy stockbrokers Conall MacCoille said he did not expect price pressures on families to ease much in the coming months.

“Announced energy price rises will push up CPI inflation in quarter four by higher than we had expected. Stronger prices will squeeze consumers’ spending power heading into the final months of the year. CPI inflation is now likely to stay close to 2% in the remainder of 2012, pushing down on real incomes and posing a threat to consumer spending growth in the final quarter of the year.”

Regional vice president of St Vincent de Paul Cork Brendan Dempsey said the increasing cost of basic, everyday goods was putting huge strain on families.

“People really are under huge pressure at the moment. We see gas and electricity prices on the rise again, the cost of food and clothes continuing to rise but benefits are going down. Struggling families just don’t seem to be getting respite on anything at the moment.”

Meanwhile, the country’s leading economic think-tank has advised additional cuts of €1.9bn in the next three budgets. It said the Government should not rule out income tax increases and cuts to public service pay and social welfare rates.

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