The cost of living in Ireland is higher than most European countries as rising inflation and higher taxes hit consumers on the double.
A price survey by the Irish Independent shows that customers here are paying more for everything from new cars and iPhones to concert tickets and takeaways.
While the cost of living has become a key political battleground across Europe, Irish consumers are paying up to 40pc more for some basic products and services when compared with our EU and UK counterparts.
Spiralling inflation, at rates not experienced since the Celtic Tiger era, will make Ireland the most expensive country within the EU by 2026 if current trends continue.
“While inflation is largely driven by changes in world prices, particularly for energy, the differences in price levels between Ireland and comparators are significantly driven by local factors including taxation,” he said.
Our price survey looked at a range of items in European countries that Irish consumers regularly visit, such as the UK, Germany, France and Spain.
The review of 20 different retail products found Ireland was either the most expensive or second most expensive in 12 of the 20 sectors sampled.
Among the items that Irish consumers now pay more for are cars, electronic goods, alcohol, tobacco, medications and even household services.
Prof Morgenroth said: “The standard Vat rate in Ireland is among the highest in the EU at 23pc.
“In Spain the standard rate of VAT is 21pc, in the UK and France it is 20pc and in Germany just 19pc. Excise on alcohol is also higher in Ireland compared to many other EU countries.”
This means that as prices rise, more and more tax is poured into Government coffers from Vat.
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The Coalition is discussing plans to reduce the cost of energy, healthcare and education, including a possible rise in the €100 energy credit, which is due to be taken off electricity bills in March.
However, Finance Minister Paschal Donohoe has ruled out a cut in Vat on electricity, which is currently 13.5pc.
All countries are being hit by rising energy costs but overall prices in Ireland are increasing at a higher rate that in other EU countries.
Ireland’s inflation rate soared to 5.5pc in December – with the price of food, alcohol, fuel and housing rental all surging. This was, however, outstripped by the UK where inflation is set to top 7pc.
Citing the other factors that feed into Ireland’s soaring costs, Prof Morgenroth said: “Irish wages are higher than say those in Spain, so labour costs, for example, of workers in retail will be higher in Ireland, and this is passed through as higher prices to consumers.”
He added: “Ireland’s relative remoteness also leads to higher prices compared to other countries, as transport costs for imported goods will be higher.
“Brexit effects will also disproportionately affect Ireland as no other EU member receives as large a share of its imports from the UK as Ireland does.”
Among the most astonishing price rises here, second-hand cars soared in value by 56pc between March 2020 and December 2021.
In July 2020 a 2012 Toyota Verso-S 1.33 petrol sold for €4,600. The same car today retails at an average of €7,500 despite the fact it is two years older.
Irish consumers have also seen new cars soar in price.
In 2019, a Hyundai Tucson 1.6 diesel cost €29,495. A 2022 Hyundai Tucson 1.6 diesel – albeit a new model and with higher basic specifications – now costs €35,095.
In Spain the price of a Hyundai Tucson rose from €22,350 in 2019 to €25,325 this year.
The cost of running a car is also high. Irish motorists are now paying an average of €1.73 per litre for petrol and €1.65 for diesel – behind only Germany/UK (petrol) and UK (diesel).
A litre of diesel that cost as little as €1.14 in May 2020 now costs €1.65 per litre.
Meanwhile, home-heating oil has surged from 42c a litre for kerosene in April 2020 to €1 per litre today.
Price-comparison site Numbeo has now ranked Ireland as the 16th most expensive country in the world in which to live.
Our survey also found that Ireland is the second most expensive of the five countries studied for high-end electronic goods.
An Apple iPhone 13 costs €929 in Ireland, behind only the UK at €933, but pricier than Germany at €899, France at €909 and Spain at €909.
Ireland was also the second most expensive for a top-end Sony Bravia 55-inch TV which retails at €849, behind only Spain at €899.
In terms of alcohol prices, high taxes are also a factor, along with the new minimum pricing regime.
An Irish shopper pays €1.81 for a 500ml can of Heineken – but the same beer costs far less in Germany (€1.43), the UK (€1.45), Spain (€1.21) and France (€1.04). A 75cl bottle of Smirnoff Red Label vodka costs €21 in Ireland but just €11.99 in Germany and €13.49 in Spain.
Only for Guinness is the situation reversed, with Ireland second cheapest for a can of the stout (€1.68), behind only the UK (€1.32).
Entertainment was another area where Irish consumers are expected to dig deeper into their pockets. Concert tickets can also be up to 50pc higher in Ireland than in Spain. A standing ticket for Ed Sheeran at an Irish venue this summer costs €88 but in the UK it costs €64. A ticket for a comparable concert in France and Spain sells for around €50.
However, bread, milk, cereals and baby food are cheaper in Ireland than in the UK, Germany, France and Spain.