Introduction of Euro
Has Fueled Inflation

By Irish America Staff
August / September 2002

The Change is in Your Pocket was the slogan used for the launch of the Euro in Ireland. But for months now, consumers have been complaining that their Euro is not going as far as they believed it would and a new survey has confirmed their worst fears.

Ireland is now the second most expensive state in the Euro zone. Only Finland has a higher cost of living. Prices have risen sharply since the change-over period. Many sectors have been found to be profiteering at the expense of consumers.

Doctors, dentists, opticians and pharmacies have all been found guilty of pushing up prices since the introduction of the new currency. A visit to a local GP used to cost about £20 – £25, now patients pay a minimum of Euro 40. It is far more expensive to book a holiday, to go to the cinema or to eat out. Even hairdressers have cashed in on the Euro confusion. Cigarettes and booze are more expensive in Ireland than anywhere else in Europe. A bottle of Irish whiskey can be bought anywhere in Europe for about half the price Irish customers pay.

In 1995 Ireland was in the cheaper league of EU states, ranking eighth dearest out of 12. France and Germany were far more expensive places to live.

During the boom years it moved quickly up the ladder to occupy fourth position. Now the Celtic Tiger has limped away but consumers are still paying the price.

Strong economic growth and the resulting impact on inflation in recent years have been blamed for the high prices. A lack of competition in certain areas of the service industry is also a key factor while higher indirect taxes and transportation costs are also blamed.

The report will make depressing reading for the Government which has already been warned to cut spending and dampen inflation as the country heads into the red.

Economists say that Ireland’s rate of inflation could outstrip growth this year, for the first time since 1992.

While Ireland has come out relatively well from the global slowdown, the economy could be plunged into crisis if inflation continues to rise, according to the Governor of the Central Bank John Hurley.

The Central Bank is also highly critical of Government spending, and has warned Finance Minister Charlie McGreevy to tighten his belt. Last year the growth in Government spending was more than twice the growth in revenue. After years of surplus the Government is heading for a deficit of up to €1 billion. ♦

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