This week the Central Statistics Office said the rate of inflation had jumped in March, as the effect of rising energy prices started to bite.
Having stood at 2.7% in the year to February, it's looking to come in around 3.6% in March – with some warning that it could reach higher still later in the year.
The Central Bank, for example, says inflation could come in at 4.2% this year in a worst-case scenario regarding the war in Iran.
But while a three (or even four) percent increase in prices might seem bad but not disastrous – especially given that we were dealing with inflation rates of more than 9% in the not-too-distant past – we have to remind ourselves that the current rates are building on the increases that have come before them.
And when you look at Ireland’s annual rate of inflation, which smooths out any of the seasonal factors or statistical blips, you see that the last time prices here fell year-on-year was February 2021.
That means we’ve essentially had five years of compounding price increase.
How much have prices risen in the past five years?
To get an idea of that, we can compare CSO data over recent years.
One caveat to make in that, though, is that the data for March is currently extremely limited. This week's figure was part of a flash estimate, which will be revised in a fresh batch of data next week. At that point, we'll also get a more detailed breakdown in terms of how prices have shifted in specific products and services.
So all that's to say that, in order to make a proper comparison, for the moment we’re better off comparing February of this year to February 2021.
When you do that, you can see that, overall, consumer prices have risen by 24% in the past five years.
That is an average across a huge array of items – it doesn't mean that everyone's shopping and energy bills have gone up by exactly a quarter in the past five years.
The actual price shift individuals will have felt depends on what's in their shopping basket, what kind of energy they use, and how much of it, and a number of other factors.
What areas have seen the biggest changes?
Perhaps unsurprisingly, energy tops the list in terms of price increases.
Specifically gas – natural gas through networks is up more than 100% – so a doubling in price ... gas is up 95%.
Electricity prices, which are heavily influenced by gas given Ireland's reliance on gas-powered generation , is up by 62% since February 2021.
Liquid fuels, like home heating oils, are more than 60% higher in the period.
Flights, or passenger transport by air as the CSO calls it, are up 77% in the period.
That may be a bit of an unfair comparison though, because in February 2021 aviation was still heavily impacted by Covid restrictions. However, we did see prices rise sharply post-lockdowns; and of course the industry is heavily impacted by higher energy costs.
Lots of other travel-related costs are higher too – package holidays are 56% dearer, travel insurance is up 42%.
Meanwhile, mortgage interest is up sharply – 88% over the five years – which points to the impact of all of those interest rate rises by the ECB.
What about the supermarket – what's gone up most at the tills?
Meat has seen some of the biggest increases in price over the five years. Fresh, chilled or frozen meat is up 42% since February 2021.
Goat, lamb and sheep meat has seen a particularly sharp rise – up 59%.
Sugar prices are also far higher in the five years. Cane sugar and beet sugar is 57% dearer than it was in early 2021.
Dairy was also one of the big risers in the period. Raw and whole milk is up 43% year-on-year. Butter and other oils and fats derived from milk is nearly 40% more expensive.
Fruits and vegetable juices are also up 40% in the five years.
How about some good news – is anything cheaper?
Yes, actually.
Technology is a lot cheaper in the period, apparently. Mobile telephone equipment has fallen by a third, video games and consoles down over 30%, laptops down by a similar rate.
That being said, some technology has definitely gotten a bit dearer in the past five years – especially at the higher end. The iPhone 13 Pro launched here at €1,179 in 2021 - this year’s iPhone Pro is €160 dearer. So that’s a 13.5% increase, rather than 34% decrease.
But maybe when you factor in mid-tier and entry level tech, overall the price is down.
Linens are down 17 to 27%, books are 21% cheaper ... clothes are cheaper, or have only risen slightly.
Children's clothes are down 14%, children's footwear is down 2%, women's clothes up 1%, which is a negligible amount over five years. Men's clothes, meanwhile, is up only 4%.
That probably points to how competitive that market is, especially in the context of the likes of Shein putting downward pressure on prices.
You can also see the impact of some Government policies in here.
Childcare services are down 35% in five years, likely reflecting the impact of the Core Funding scheme.
Passenger transport by bus and train are also down by between 21 and 25%, largely thanks to the reduction in public transport fares that kicked in, in mid-2022.
And good news for drivers too: Motor car insurance is down around 5%, apparently, which is good news. Though probably not nearly as much as we'd all like and certainly not enough to make up for what we're losing at the pumps.
If we look at how prices have changed over ten years, do we see much difference?
Not a huge amount, actually.
Overall prices are up 27% over the ten years to February compared to a 24% rise in the past five years.
Most of the inflation we've endured in the past decade has been concentrated into the last few years. In fact, when you look at the annual rate between 2016 and early 2021, you rarely see it breaking above 1%. In many months in that period, prices were actually falling.
But there are some areas where there is a far bigger price shift over ten years than we saw in five.
Motor insurance, actually, is one. It's only down 5% over five years, but 28% lower over ten.
Electricity prices are up more than 80% over ten years, as opposed to 60% over five years.
Home heating oils have doubled over ten years, as opposed to a 60% rise over five.
Tobacco products are up more than 80% over ten years too.
Letter handling services – so postage – has also seen a much bigger shift over the ten years. Prices are up nearly 90% since 2021 – but 175% since 2016, reflecting all of the postage price increases in recent years.
Is it possible to give a simple explanation for all of these increases?
There is a myriad of reasons and it differs depending on the category.
For example the likes of sugar, cocoa, coffee and wheat – and wine – have all been affected by a mixture of wetter-than-normal weather, and then droughts and even wildfires, which have impacted crop yields, for example.
And that has had a knock-on effect on the cost of those raw materials, which has pushed up consumer prices.
But really it all goes back to energy because the price of energy rose sharply in the wake of Russia's invasion of Ukraine.
There are so many products that are directly dependent on petroleum and then anything that’s manufactured or processed in any way is energy intensive. It then has to be transported, which is more expensive too.
Interestingly, though, notwithstanding the recent spike on the back of the US attacks on Iran, energy prices had fallen back close to their pre-war levels in recent months.
Brent Crude, for example, was sitting at almost the exact same price in mid-February of this year than it was in mid-February of 2021.
And while energy prices from a consumer and business point of view had fallen back a bit from their peak, as we can see, the impact of that inflation in 2022 and 2023 is now baked into the economy.
This is what central banks are talking about when they say they don’t want price rises to become embedded.
That might happen when a company, or companies, along the supply chain pass on the price increase of a raw material, but then fail to pass on the full change when costs begin to fall again.
Or it can be when a consumer brand initially raises prices out of necessity, but then keeps them there because it's found shoppers are willing to pay it.
But this embedding can also happen around things like wages.
Because, of course, workers who saw their bills increase sharply would have sought out higher pay to help deal with this.
But as vital as those higher wages may have been to the worker, they would have added to the costs facing the company. That means that, even if the prices of their raw materials and utilities fell back to where it was five years ago, their total costs will not do the same.
How much have wages risen in the past five years?
They have risen - maybe not at the same time, or quite the same rate, but enough to have at least softened the blow of sharp inflation.
Firstly, another caveat on the CSO data.
The latest we have is for the fourth quarter of 2025 so, to give a similar comparison, we will compare it to the end of 2020.
And over those five years, we see weekly earnings across the economy rising by 19% overall. So that’s a bit behind the 24% increase in general inflation.
But, just like the way the overall rate of inflation might not reflect how much your own household costs have risen, that rise in inflation may not reflect your own wage changes. It’s an average and the real rate differs from industry to industry.
For example, Information and Communications employees on average saw the biggest increase since late 2020. Their wages are up more than 30% there, so well ahead of the rate of inflation.
They also enjoyed those increases from a much higher starting point; so they’re now the best paid sector by a distance.
Some Services roles have also seen a 31% increase in pay since late 2020.
Accommodation and Food Services – so restaurants and hotels – have seen wages rise by 22%, just under the rate of inflation. However, they were and are the lowest paid sector, so it’s a small increase in real money terms.
Then at the other end Arts, Entertainment and Recreation have only seen their wages rise by 9% in the five years, again from a relatively low base. That means they've lost a lot of ground in terms of costs.
But of course even those figures are general across sectors – they wouldn’t necessarily capture changes at different levels of experience or within different areas of the industry.
