Dramatic rise in cost of living, figures show

CONSUMER prices have risen more sharply in Ireland than any other country in the EU in the past year.

The cost of living here has also increased faster over the past six years than almost all other industrialised nations, including the US and Japan.

Latest EU figures show that the cost of goods and services have risen on average by 4.7% in Ireland in the past 12 months over twice the EU average of just 2.1%.

Ireland's high inflation rate compares unfavourably with its nearest neighbours, including the UK (1.6%), Germany (1%) and France 2.1%.

And prices are set to increase further from next Wednesday with a 1% increase in VAT due to be added to a wide variety of goods and services including fuels, newspapers, magazines, photographic products, restaurants, hotels, cinemas, hairdressing and gardening products.

The figures based on prices across the EU in November have still to factor in recent increases in bus and train fares as well as further increases in the cost of electricity and gas due in the New Year.

The Consumers' Association of Ireland warned yesterday that the country was now "caught in a price and wage increase spiral that is going nowhere".

"The Government needs to take strong, hands-on action to bring about downward pressure on the general level of prices," said CAI chief executive, Dermott Jewell.

He claimed prices were being kept artificially high in many sectors of the economy, including telecommunications, transport and health and motor insurance, due to a lack of competition.

Mr Jewell also accused some retailers of profiteering over the past year by raising prices twice before and after the introduction of the euro. However, Mr Jewell said the new currency had proved useful in making it easier for Irish consumers to compare general prices with other European countries. In particular, the cost of education, health, eating out, drink and tobacco rose dramatically during 2002.

Only clothing and footwear prices are cheaper now that this time last year with prices having fallen by 5.5%.

However, any savings on clothing items were counterbalanced by an almost 14% increase in the cost of education and a 10% rise in health costs.

Figures provided by the EU statistical office, Eurostat, show that hotel and restaurant charges here rose by almost 7% in 2002.

Although telecommunication charges fell in most EU countries in the past year, the price of phone calls in Ireland rose by 1% on average.

Statistics complied by Eurostat also show the cost of living in Ireland has risen by 23% since 1996 compared to the EU average of 11.7% and the US (15.6%) and a fall of 0.2% in Japan.