Ireland is expensive due to taxes and retail, says academic

An Irish academic says higher taxes, a different retail structure and market factors are the reason why Ireland is one of the most expensive countries in Europe.

Damien O’Reilly, a lecturer in retail management in DIT, told RTÉ’s Morning Ireland that market factors tend to drive up the cost of food. He was responding to new data from Eurostat which show that Ireland is the most expensive country in Europe in which to buy alcohol with prices at 175 per cent of the EU average.

On average the cost of food and non-alcoholic drinks in Ireland is 119 per cent of the EU average, the fourth highest in the EU.

The EU’s statistics agency also said Ireland is the second most expensive for tobacco at 189 per cent of the EU average, with only the United Kingdom higher at 218 per cent.

Only Denmark (145 per cent), Sweden (124 per cent), Austria (120 per cent) are more expensive.

In Ireland, bread and cereals (111 per cent of EU average), meat (106 per cent) and milk, cheese and eggs (128 per cent) all cost above the EU average.

The data is based on a 2015 price survey covering 440 products across Europe.

Donall O’Keefe of The Drinks Industry Group of Ireland (DIGI) said the high price of alcohol in Ireland is directly related to the unfair excise rate and that this is a direct tax on jobs, tourism and consumers.

“Excise is a tax on jobs, it is a tax on tourism and it is a tax on Irish consumers,” he said.

The Eurostat figures also show Ireland had the second highest per capita GDP in the EU in 2015 at 145 per cent of the EU average.

Luxembourg had the highest per capita GDP in the EU at 271 per cent of the average, while Bulgaria (46 per cent) had the lowest.

However, when it comes to Actual Individual Consumption (AIC) - which measures the material welfare of households - Ireland was at 95 per cent of the EU average.

Mr O’Reilly said that the reason Ireland’s dairy products cost so much even though there is a large dairy industry here is because 90 per cent of the milk produced in Ireland is for export.

“A lot of it is then re-imported as finished product which drives up the cost,” he said.

He also said supermarkets in Ireland have higher margins than elsewhere in Europe and that Irish shoppers are attracted to brands when they could buy cheaper own brands.

He said Irish shoppers tend to go for “higher quality foods”.