Back in the day it was questions about the price of milk and the cost of a white sliced pan that left politicians squirming at election time. Now the elevated costs of almost every item on the weekly shopping list is troubling governing parties, an issue that will also likely test the Fianna Fáil and Fine Gael-led coalition on polling day on Friday week.
There is plenty of evidence that raging global inflation has led to the downfall of incumbents around the world, regardless of their political stripe. The Tories failed to expunge memories of the short-lived premiership of Liz Truss while trying to reassure voters about shrinking household incomes at the Westminster elections.
And in the US, a $9 tube of toothpaste became emblematic of soaring grocery prices that came to haunt Kamala Harris: American grocery prices probably played an outsized role in the sweeping failure of the Democrats to keep the White House and for their losses in Congressional races, despite a booming US economy, analysts say.
In the Republic, with less than two weeks of the campaign to run, there hasn’t been anything like the $9 toothpaste to define the election, for now at least.
But opinion polls suggest it is the cost of living – along with health and housing – that is weighing most on the minds of would-be voters. And all this despite employment levels of 2.75 million jobs that are at the highest in the history of the state, and an unemployment rate of 4.2% that is close to a record low.
The reason is that the cost of living crisis is “devastating” and households blame their governing politicians for their plight, says Tom McDonnell, co-director at the National Economic Research Institute (Neri), the trade union group that operates from offices in Dublin and Belfast.
“It’s kryptonite for incumbents,” McDonnell tells the Irish News.
Orla O’Connor, director of the National Women’s Council (NWC), the all-Ireland advocacy group that helps 200 member organisations lobby for social policy in Dublin and at Stormont, says price hikes of recent years have left people struggling to pay their bills.
At a hustings event for politicians hosted by the NWC and Oxfam in central Dublin, O’Connor spoke of the pressing issues facing women on low incomes and social payments to make ends meet.
“Cost of living is definitely coming up on the doorsteps as an election issue,” she tells the Irish News.
The drivers of inflation that hit everything from food to booze were the same here as most other places. Surges in wholesale gas and crude oil prices at the outbreak of the Ukraine war were swiftly passed onto households. At the end of the global Covid pandemic, enormous snarl-ups in the supply chains that link factories in China to the rest of the world only made matters worse.
Despite initial impressions, official figures bear out the underlying scars. At only 0.7%, the latest annual inflation reading in the Republic has fallen dramatically. It is currently running much cooler than comparable rates in the UK at 1.7% (for September), and at the 1.5% rate in France (for October).
But the Central Statistics Office (CSO) figures also show the cumulative effects for the worst period for price hikes since the early Noughties.
Price changes in the basket of 53,000 goods and services the CSO uses to calculate its monthly inflation measure suggests consumer prices across the economy are 20% higher since the start of 2021.
There is also the significant matter that the Republic entered the global inflation crisis with consumer price levels that were already among the highest in the EU, particularly for food items.
Meanwhile, official figures and the Kantar monthly supermarket surveys suggest grocery price inflation continues to outpace overall inflation in both the Republic and in Britain.
Senior economist Austin Hughes, who conducts all-Ireland consumer sentiment surveys for credit unions, says grocery prices remain the way most households experience the fallout from inflation.
But unlike the UK Treasury’s straitened circumstances, the Dublin government has huge amounts of money in its coffers to continue to fund widespread subsidies for household energy and winter fuel payments far into 2025, analysts say.
When sanctioning the one-off payments in the budget early last month, the coalition parties undoubtedly had the election in mind, but nonetheless risk increasing deprivation rates should they end them.
“The government has created a problem for the next government but in the meantime have protected themselves,” Neri’s McDonnell says.
“I think they will go a long way to help them win the general election.”
Eamon Quinn is at eamon.quinnbiz@gmail.com
