Ireland the second most expensive country in the EU

In news that may not surprise anyone, latest figures from Eurostat, the EU's statistical agency, have revealed Ireland is the second most expensive country in the EU with prices here 42% above the EU average. 

Prices in Ireland are now well above traditionally expensive countries such as Sweden and Finland. And we're even more expensive than oil-rich Norway. However we still trail other non-EU countries Switzerland and Iceland - for now! 

Bulgaria and Romania both have the lowest prices in the EU at 40% below average. 

*non-EU country

Deep dive

Taking a deep dive into the figures, Ireland has the second most expensive alcohol in the entire EU with prices over double the EU average. Only Finland has higher prices. 

There is a huge variation in the price of alcohol among EU countries, more so than any other product, which is mainly due to differences in taxation, with Ireland having some of the highest rates of tax on alcohol in the world. And of course the introduction of Minimum Unit Pricing (MUP) has added to costs even more here.

Our housing costs such as rents, mortgage rates, gas and electricity, are the most expensive in the EU at over double the average.

Ireland also performs poorly when it comes to restaurants and hotels, where prices are the third most expensive in the EU, at 28% above average. Only Denmark and Finland have higher prices.

We also have the fourth most expensive food and non-alcoholic drink in the EU, with prices here 13% above average. But this is a big improvement from 2014 when prices were 24% higher. The ever increasing popularity of the German discounters has clearly had a positive effect on grocery prices here over the past decade. Prices are most expensive in Luxembourg where they're 19% above average and cheapest in Romania at almost 27% below.

Meanwhile our communication costs are the fourth highest in the EU at 42% above average.

Fancy a trip to the cinema, museum or a concert? That'll cost you. Prices for recreational and cultural activities are the sixth highest in the EU at 16% above average.

However when it comes to clothing and footwear, things are much better value. Clothing costs in Ireland are actually 4% BELOW the EU average making Ireland one of the cheapest countries in the EU - thank God for Penneys and Dunnes! And our footwear prices are just 5% above average.

The 'Harvey Norman' effect can also be seen in our prices for household appliances. Although prices here are the sixth highest in the EU they're 'only' around 8% above the EU average.

Danger to competitiveness

No one is under the illusion that Ireland is a cheap place to live. However the scale of the difference in prices between Ireland and our neighbours is still pretty shocking.

And it’s getting worse, which doesn’t bode well for our competitiveness. A decade ago prices here were 'only' around 24% higher than the EU average. 

Of course wages in Ireland are also above the EU average. However not by over 42% for many people. 

Many other countries in Europe also benefit from far cheaper childcare, which isn't covered by these figures.

Why is Ireland so expensive?

There are several reasons why prices here are so high.

These include:

• Our higher wages 
• A lack of competition in certain sectors 
• High taxation on certain goods such as tobacco and alcohol
• Low government subsidies in certain areas such as public transport and childcare
• Our small, dispersed population  
• High insurance costs for businesses, which then get passed on to consumers
• High energy costs 

We delve into all these reasons in more detail in this article here.

What can be done?

Ireland will never be as cheap as Romania, Poland or Bulgaria etc. And we need to remember that many of the most expensive countries in the world also have among the best standards of living.

But prices here continue to creep higher and higher compared to the EU average.  

At a minimum, the Government should look at measures that are within its control to lower the impact of high prices and the cost of living in Ireland. 

At 23%, our rate of VAT is among the highest in the world. While charges for GPs visits (which are free in many other EU countries) undoubtedly contribute to us having high health costs. 

Meanwhile we still have very childcare costs. While Government stamp duty leads to higher car insurance and home insurance.

And repeated failures to tackle our comp culture mean some businesses continue to pay astronomical insurance costs, which feeds into higher prices.  

Here's an article on the ways Government taxes and charges currently add to our cost of living.

Consumer bodies such as the CCPC, and regulators such as the CRU for energy and ComReg for telecommunications also need to do better jobs and stand up for consumers more. If they need more powers to enforce laws and bring prices down, they should demand them. 

Finally, the Government should look into creating a new ministerial position for consumer affairs. We rightly have a huge focus on business and enterprise in almost all areas of government in this country. But that same focus isn’t extended to consumers. 

Let's hear from you!

What do you think should be done to tackle the cost of living in Ireland?

Let us know in the comments below or get in touch with us on social media.