Inflation?
Posted on February 23, 2007
Filed Under What's New |
Inflation in Ireland is now running at over 5% or twice the European average, says this morning’s news. Still seems a modest figure to me, if you compare it with experience. I mean my car parking costs never go up by 5%, they go up 20%. Five years ago it was still possible to buy a £2.00 lunch time bread roll in Cork. The lunch time roll broke through the Euro 5 barrier last year. Inflation at 25% p.a., I think.
Though mortgage rates are going up they don’t reflect the fact that the duty payable on buying a house, while remaining static in % terms, means people are paying huge amounts to move house compared with the recent past - a piece of land, which may have cost 50,000 Euro in County Cork six or seven years ago now costs 300,000 which means a 27,000 Euro duty compared with next to nothing back then. Inflation at 100% per annum.
Of course the asset base of people paying these amounts is rising too so you might argue, doesn’t that compensate? It’s the very nature of inflation though that assets and costs inflate together, the belief that the first will always compensate for the latter is what drives inflation in domestic property.
Artists at the lower end of the earnings bracket who came to Ireland to eke out a living while they practiced their art are now unable to make ends meet - yes paintings are rising in price but there are artists who saw Ireland as a place to come and ignore the market in favour of getting on with the creativity. That was the beauty of being here and it reflected well on Ireland’s moral values. So inflation here also has a non-monetary cost.
Finally food prices grew 16% in the past year, according to recent reports.
So where does the figure of 5% come from and why is not critically assessed in the media? One reason why it is so low is that the January sales impact on inflation measures - so shop discounts are holding the figure back. The other factor though is inflation figures are malleable as they are made up of a representative basket of goods - representative of the average family…. Governments love them. Who else could pretend that Ireland has not seen double digit inflation, at least, for years? From the poorest to the most expensive country in Europe at 3, 4, 5% per annum?
In the information age a better litmus test would be experience - set up a website that allows people to report their experiences of costs. One of our largest potential costs this past twelve months has been a “new” second hand car that keeps breaking down, lifting its potential cost to astronomic proportions. The difficulty in getting life insurance if you’ve been ill is another huge cost burden. I am sure there are many more. Meanwhile the £2.00 roll stands as a memorial, somewhere gathering mould, to the days of reasonable living costs in Ireland.
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6 Responses to “Inflation?”
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Haydn
off this topic but nice piece in Times today
keith
In the UK they index inflation to the cost of certain “key” products, conveniently leaving out all the things that rise by ridiculous percentages year on year (electricity and gas spring to mind). All of which of course contributes to the idea that inflation is low, when in fact any salary increases are more than swallowed up by the dramatic increases in the cost of essentials like fuel.
Thanks Keith - believe it or not I wrote it in December so pleased to see it finally appear. Price you pay for being on the arts page. have you been following the Monday Convergence Culture on the same page?
I think the Government do pretty much the same in Ireland don’t they KAV?
Unfortunately not Haydn - my newspaper consumption is reserved to Friday, Sat and Sunday. Kind of a treat on those days as I pull away a little from the computer screen.
keith
I’m not sure Haydn, having emigrated before such things became of interest to me! However, you’re probably right. This is from the BBC: The Consumer Prices Index is an attempt to measure the changes in the cost of buying a representative basket of UK goods and services. However, the CPI does not include council tax, mortgage interest payments and some other housing costs (like fuel).
Which seems a ridiculous method of measurement, when these are the things that increase the most year on year. However, there’s no doubt a good reason for it.