COST OF LIVING IN IRELAND REACHING NEW HEIGHTS

It’s déjà vu in Ireland with regard to the cost of living. Only worse! This Christmas – local observers say – is going to be the most expensive one since before the economic crash ten years ago. Up goes the cost of socializing, with travel costs hitting double digits.
In the backdrop of this seasonal situation, the single item which has reached unprecedented proportion is the cost of accommodation. This is most visible in the city of Dublin, whose population has increased from 1.2 million a few years ago to 1.8 million, over 37% of the Republic’s population. A huge heart in a child’s body! If this trend continues Ireland will probably change its name to Dublin. They say – and it is true – prices obey the law of supply and demand. The fewer the houses/apartments on offer the higher the rents, plus, one can argue, another hidden factor called “greed”. As an economist I would like to mention that in economics there is behavioral trend which is defined as “the effect of demonstration”, meaning, in the case in question, that if one or more landlords dis disproportionally increase the rent of their apartments or houses, because they get a whiff of favourable economic growth, there will be other landlords wanting to emulate them, hence a chain reaction which will crucify people looking for a place where to live. As simple as that. Is government doing something about it? Alas, arguably very little.
Back to the cost of living the current inflationary imbalance is that while most people may save in purchasing some consumer goods, their savings are wiped out by the cost of services, such as transport, household bills, eating out, drinking and toys which has been hiking over the last decade. It’s like a dog trying to bite its tail.
Concetto La Malfa



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