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Sour Mash

The 'low Inflation' Lie In Ireland

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A good David McWilliams article:

Why does it feel as if you have less money in your pocket at the end of every month?

At a time when the rate of inflation is supposed to be low, the price of bus travel, which is hardly a luxury item, has jumped dramatically. The monthly Dublin Bus Rambler ticket is now €32.50 more expensive than it was in 2011. To put that in context, this is a 30pc increase in three years. Thirty percent in three years! This is Latin American 1980s-style price inflation.

But it is actually much worse because in Latin America in the 1980s (as was the case in Ireland in the 1970s) wages were going up in tandem with prices. Here, something much more egregious is going on. Wages are not keeping up with inflation and therefore, every month, ordinary people are getting poorer, not richer.

Do you feel that at the end of each week the amount of money left in your pocket is declining?

If the answer is yes, it is because, across the board, the price of basic items we all spend money on every day is rising much faster than our wages.

..

It is because the adjustment in Ireland has been overwhelmingly shouldered by the average person and, if you are lucky enough to have kept your job, your wages will have suffered. Remember the wages in the chart do not take into account what has happened to income and other taxes. The impact of wage freezes and tax hikes on take-home pay has been enormous.

Interestingly, and it’s not in the chart, the cost of clothing and shoes has collapsed. This is because retail sales have plummeted, so prices have had to fall. In addition, the retail market is highly competitive, so a fall in demand leads to falls in prices. So traders on the main streets on Ireland have seen their margins crushed.

Nothing new under the sun it seems - and it shows how pretty much the entire Western political establishment has decided to make the proles pay for the elites' mistakes.

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To achieve a sustainable recovery asset prices and current prices have to be brought back into equilibrium. If asset prices aren't allowed to correct (as in the UK), or correct only slowly (as in Ireland), then current prices will keep on rising, depressing living standards for the majority as income growth fails to keep pace.

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I don't notice the food/shop inflation here like I did in the UK. An ALDI chicken was $3.60 last year and it still is now. Fair enough they are £3.00 in the UK.

I think shops here have been frightened to put their prices up so margins have been falling and masking the inflation to a certain degree, either that or someone is taking the piss big time in the UK.

I live out in the country, so miss out on the luxury of tolls, buses and trains. We have downsized car from 28mg to 58mpg and saved on car tax from €1400/yr to €299/yr.

If we were bank renters we would have to pay the property tax, which doubled in the last year.

Water is the same (free) since we have a well.

In effect our expenses are €750 rent per month for detached 4 bed bungalow in 1./2 acre 10 miles/20 mins from the city center. Mobile broadband 50gb/month and electricity. We recycle our rubbish, so no bin collection charge. then there are car running costs and that's it.

Don't pay the TV tax as we have never had a warning latter :)

Oh, and we spend €20 in 20 liters of heating oil every week and top up the oil tank from a 20 liter drum bought from the garage.

I guess all in all house running expenses are about €900pcm including rent, broadband, electricity and heating.

We were looking at moving back to Bristol and couldn't really find anywhere nice to rent <£1000pcm (€1200), and the wages are about the same here.

Edited by Gone to Ireland.

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There are some upward and downward variations in different price...

"nflation is a persistent increase in the general price level of goods and services in an economy over a period of time.[1] When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation reflects a reduction in the purchasing power per unit of money – a loss of real value in the medium of exchange and unit of account within the economy"

Since I am tight, I notice inflation and personally feel the effects perhaps a little more than others.

I see little to no inflation here personally, back in the UK in 2009/10 I was worried.

Everyone's spending make up is different, luckily the outside Dublin renters inflation is quite low to zero. I can thank the oversupply of property and the property owner being liable for the property tax.

I just don't know how people manage in the UK, when I go back and see my friends and relatives I quite often think they are being 'tight' for tights sake but I realize that they just don't have the money for things.

Being poor in Ireland is having only enough money for 4 pints rather than 10.

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A daily ticket for public transport in South Yorkshire is £7.20. Minimum wage £6.31.

It used to be £5.20 when minimum wage was £5.80.

Allotment rents have gone up above inflation and it isn't justifiable when you consider how much the council have spent on them, we are paying well over the odds, and further price increases are being touted.

Water, fuel, broadband, food consistently up above inflation. So called social rent consistently up above inflation, now overtaking private rents.

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whats aa bank renter?!

I think they call them mortgagees :) + SVR's increased last year to cover the millions who have decided to stop repaying their mortgages.

If that rate of inflation were in some banana style South American country the UK media would be all over the story.

I would have thought that the last currency debasement and current relative strength of the pound would be keeping inflation much lower in the UK, but it's not.

Most of the UK's inflation seems to be driven by rent seeking..

  • Water

  • Electricity

  • Broadband

  • Allotments

  • Public transport

Don't forget, each time the state sells of a public service like the electricity system it then falls into the hands of rent seekers. Primarily this is the reason I believe capitalism fails because eventually governments sell everything and anything whilst amounting huge piles of debt. Eventually the system collapses leaving the 1% with everything - all in all it's just a large game of monopoly! All you yould need to do is change the rules of the game to stop this from happening, but well all know that eventually the game reaches te point where it is full of Zomby players who are just waiting for the end of the game.

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I think they call them mortgagees :) + SVR's increased last year to cover the millions who have decided to stop repaying their mortgages.

I would have thought that the last currency debasement and current relative strength of the pound would be keeping inflation much lower in the UK, but it's not.

Most of the UK's inflation seems to be driven by rent seeking..

  • Water

  • Electricity

  • Broadband

  • Allotments

  • Public transport

Don't forget, each time the state sells of a public service like the electricity system it then falls into the hands of rent seekers. Primarily this is the reason I believe capitalism fails because eventually governments sell everything and anything whilst amounting huge piles of debt. Eventually the system collapses leaving the 1% with everything - all in all it's just a large game of monopoly! All you yould need to do is change the rules of the game to stop this from happening, but well all know that eventually the game reaches te point where it is full of Zomby players who are just waiting for the end of the game.

We only notice what has gone up and it colours our vision of inflation. My largest outgoing, petrol, has considerably reduced since January 2013. I'm not noticing much else going up, convenience food has gone up definitely, but if Greggs want to play silly buggers they are axed from my basket.

As for domestic fuel, in what is looking like one of the mildest winters on record the basket for that is reduced too and with it the aggregate spend. About time the fuel companies took a good beating.

Some food has gone up noticeably. Tinned pilchards which were 37p about seven years ago, are now about 89p. Still they were £1.09 in 1978. You can have temporary blips in certain things but over the decades it is difficult to keep inflation going. Which is why CPI is probably over-recording. Asset prices are a different matter.

2% CPI looks a bit overdone IMO....0% would cover it for me.

Edited by crashmonitor

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We only notice what has gone up and it colours our vision of inflation. My largest outgoing, petrol, has considerably reduced since January 2013. I'm not noticing much else going up, convenience food has gone up definitely, but if Greggs want to play silly buggers they are axed from my basket.

As for domestic fuel, in what is looking like one of the mildest winters on record the basket for that is reduced too and with it the aggregate spend. About time the fuel companies took a good beating.

Some food has gone up noticeably. Tinned pilchards which were 37p about seven years ago, are now about 89p. Still they were £1.09 in 1978. You can have temporary blips in certain things but over the decades it is difficult to keep inflation going. Which is why CPI is probably over-recording. Asset prices are a different matter.

2% CPI looks a bit overdone IMO....0% would cover it for me.

Yeah, agree with that.

Energy companies and banks are screaming targets for a competition inquiry, but .... same old story.

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