Election 2024: Cost of living — It's always the economy, stupid
In Food Years Has Of Two The Sharply Cost Risen The Past
In the wake of Donald Trump’s crushing defeat of Kamala Harris in the US presidential election, much of the talk turned to the reasons why.
The common refrain of “It’s the economy, stupid” was rolled out as people were said to have voted with their wallets.
Under Biden and the Democrats, inflation had risen significantly and everything was costing more, so the electorate went the other way, with Trump and the Republicans.
Cost of living is set to feature just as prominently in this month’s general election at home as, like the US, Irish households have lived through a period where the price of so many things surged.
When the last Government took office in 2020, inflation was not a factor at all.
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In fact, in the summer of 2020 during the first year of covid, the annual inflation rate showed prices were actually falling.
By the following autumn, in 2021, things were beginning to creep upwards.
By the start of 2022, inflation was at 5% and then Russia’s invasion of Ukraine supercharged everything, with inflation peaking at 9.3% in October of that year.
The price of everything went up.
The food shop, housing, and most dramatically, electricity and gas bills.
The Government’s response was to step in with supports, which included a blanket electricity credit to all households, and extra once-off payments for certain social welfare recipients.
Although the payments were not permanent measures, they have been rolled out at successive budgets in recent years, including last month’s, as the Government faced claims of trying to “buy the election”, such was the spending splurge.
Stephen Moffatt, national policy manager at children's charity Barnardos, said while the Government did step in during the cost-of-living crisis, there have been “missed opportunities” to take further action to help struggling families.
“They did act relatively quickly to bring in supports, which was positive initially,” he said.
“A lot of those payments were lump sums which families that we support were really appreciative of.
"It did help them stay afloat as they were really, really struggling.”
Mr Moffatt said when prices started to surge coming out of covid and following the war in Ukraine, many families had already been hard-pressed with their day-to-day costs.
“They were struggling anyway but when the cost of everything went up, it was borderline catastrophic,” he said.
A really positive aspect of the Government during this term has been its action on free school books, according to Mr Moffatt.
He said: “That’s a bigger measure. And unlike those once-off payments, it’s long term and permanent. If you have multiple children in schools, that really has an impact.”
He also pointed to free hot meals in schools as helping parents financially and progress in the cost of early years services, but added progress should happen faster in future.
The Society of St Vincent de Paul, meanwhile, pointed to measures such as extending the fuel allowance to carers, increases in the income thresholds for student grants, and the increase to the minimum wage, as being welcome but not going far enough.
“While prices are now increasing more slowly, the cost-of-living crisis has not gone away, and prices for essential goods and services are now significantly higher than they were in 2020,” the charity said.
“In the last four years, there has been a cumulative increase of 16.8% in the costs of meeting a minimum essential standard of living, the amount needed to make sure people can afford a basic but decent standard of living.
SVP said while welcome, the measures in recent budgets had not tackled the “underlying insecurity for people in poverty”, who are often one unexpected bill or rent increase away from a crisis.
Mr Moffatt said despite the supports, deprivation rates have increased in Ireland in the last year.
“There’s real concerns around that,” he said.
He said supports for one-parent families in particular had not been enough to pull them out of deprivation and if once-off payments were going to be tapered off, something tangible and substantial needed to replace them.
A key ask for charities like Barnardos and SVP under the next government is reform of social welfare payments to make them index-linked to inflation, or a minimum essential standard of living so that when the cost of living goes up, the State pension goes up at the same rate.
SVP said the next Government should enact a poverty act to make its targets in this area legally binding.
“We need to take out some of the politicisation of these issues,” Mr Moffatt said.
"What the next government really needs to do is provide more certainty to those families who are struggling. And telling them we’re not going to let your children go without essentials.”