Cost-of-living rise outstrips social welfare increases, report finds

Inflationary pressures have caused basic cost of living to increase by almost 17 per cent over the past four years, say researchers at SVP

The basic cost of living is up almost 17 per cent in the past four years, new research has found. Photograph: iStock

Inflationary pressures have caused the basic cost of living to increase by almost 17 per cent in the past four years, ahead of the rate of increase in social welfare supports, new research has found.

The 2024 Minimal Essential Standard of Living (MESL) report, published on Tuesday, attempts to measure what individuals and households in Ireland need to “live with dignity”.

The annual indicator is compiled by the Vincentian MESL Research Centre at the Society of Saint Vincent de Paul (SVP) and gives figures for both urban and rural households.

Using a basket-of-goods approach, it looks at the average weekly cost of goods and services such as energy for a socially acceptable minimum standard of living.

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“The research finds a relative stabilisation in costs, with a slight decline compared to 2023,” it said.

“However, the cumulative impact of inflation to date has resulted in a significant increase of 16.8 per cent in core MESL costs from 2020 to 2024. By comparison, the standard core working-age social welfare rate has increased by 14.3 per cent over the same period.”

As a result, it said, the level of inadequate income continues to be at a higher rate than that found before 2023.

In particular, the latest breakdown shows the cost of the needs of a child aged 12 and over remains the highest for any other age group of children, at €149 per week, compared to preschool at €60.

Infant needs have increased by 22.4 per cent from 2020 to 2024, driven by substantial rises in the costs of baby milk formula (37 per cent) and nappies (84 per cent), according to the report.

Eligibility for medical cards brings core MESL costs lower, particularly for second-level schoolchildren.

Food is found to be the largest category of expenditure for each age group, followed by clothing costs for infants and pre-school-aged children. Social-inclusion costs are the second-largest area of expense for school-age children.

Although 2024 saw a significant reduction in household energy costs – falling by 24.9 per cent in urban households and by 12.2 per cent for rural households – prices remain “substantially higher” than in 2020, the authors point out. In that four-year period, the cost has risen 62.7 per cent and 54 per cent for each respective category.

Although core costs since its 2023 report have fallen, there has still been a 16.8 per cent cumulative increase over the broader four-year range.

The analysis looks at social welfare income adequacy for 214 test household cases. In 2024, it found, all of these showed an improvement in social welfare income as a percentage of MESL expenditure need compared to the previous year.

“While the incidence and severity of deep inadequacy have improved since 2023, they remain elevated compared to the declining trend from 2020 to 2022,” the report noted.

“Households with older children (aged 12 and over) and single-adult-headed households continue to be at a greater risk of deep income inadequacy when dependent on social welfare.”

Mark Hilliard

Mark Hilliard

Mark Hilliard is a reporter with The Irish Times