Most costly Christmas in a decade
Price of season set to hit Celtic Tiger peak
AN analysis of CSO data shows the cost of Christmas has reached a 10year high and is now set to hit the same level as at the height of the Celtic Tiger, the Sunday Independent can reveal.
Double-digit inflation on travel costs and activities related to socialising mean this will be the most expensive Christmas since before the economic crash a decade ago.
Recent price growth, especially on items on which consumers typically spend more over the festive period, means this Christmas is set to be one the costliest the country has ever seen.
While many businesses will be hopeful of making significant profits in the coming weeks, consumers can expect to spend significantly to celebrate Christmas.
Consumer price data shows a steady rise in inflation over the past decade has put the current cost of living on a par with where the country was just weeks before the 2008 crash. It is also 7pc higher than where we were a decade ago, meaning more money is set to be spent on festive goods than in the years since the downturn.
A study of the CSO’s consumer price index shows anyone travelling home for Christmas will have to cope with dramatic price changes.
A leading think tank said these increases have been loaded by rising oil prices, the future sustainability of fuels and environmental concerns.
And the cost of socialising in bars and restaurants has increased by up to 15pc, the figures also show.
ESRI research professor Kieran McQuinn said savings families may make on some consumer goods, such as groceries and clothing, are being wiped out by the cost of services.
“That boils down to manufactured goods versus services and the different rates of inflation there,” he told the Sunday Independent.
“What you see is a breakdown between services and goods, with different rates of inflation between those.”
The Restaurants Association of Ireland said it is hopeful of a splurge in the next month with the number of bookings and reservations on the rise.
One retail expert said he expects spending to peak over the festive period as friends and families meet up over the holiday season.
Dublin Town chief executive Richard Guiney said upcoming Black Friday sales will also be good for retailers.
“There is a good atmosphere and people do like the city,” he said. “There will be some Black Friday deals and that means Christmas will come early for some retailers next weekend.”
Increasing costs of services, transport, household bills, eating out and paying for a drink outweighs savings made on groceries and toys because of accumulated price hikes over the past 10 years.
Restaurants Association of Ireland chief executive Adrian Cummins said his members are hoping for a Christmas splurge.
“The restaurant scene is one of the biggest to benefit from Christmas along with retail,” he said.
“Bookings seem to be strong and we are hoping there is an upturn in consumer spending, the amount of money per head that people spend.
“I think people are saving for Christmas. I think that is what is happening, that people do save up and then they splash out at Christmas. The year-to-date spend has not been as good as it might have been.”
Driving home for Christmas means spending an extra 23pc on petrol or 25pc on diesel compared to 10 years ago. Taking public transport is also much more expensive.
Anyone coming home from the UK or elsewhere in Europe on a ferry faces the greatest price hikes. According to CSO data, passengers on ferries pay 67pc more on average for their tickets compared to 2009.
Bus fares are now 40pc more expensive. Meanwhile, taking the train also costs more, up 28.7pc compared to 10 years ago. Flying home costs 18pc more now.
Mr McQuinn said travel costs will increase further next year.
“Those costs are going to increase over time as people become more aware and there is such an issue now about the sustainability of petrol. If we are to address them, they are
going to result in higher costs in certain types of transport.”
Anyone going out over the Christmas period can expect to pay more in restaurants, bars and hotels than a decade ago. On average, a visit to a restaurant or hotel costs 14.3pc more. Meanwhile, anyone heading to a Christmas party can expect to pay 13.2pc more in a bar compared to this time 10 years ago.
Much of this is because of rising alcohol costs. A glass of whiskey, gin, vodka or rum is 15.5pc more expensive now. The cost of a bottle or pint of beer is 13pc higher.
The price of a glass or bottle of wine has risen by an average of 11.6pc over the past 10 years.
Non-drinkers or designated drivers may also end up spending more in bars over the festive period. A soft drink or mineral water now costs 12.8pc more than in 2009, according to the research.
However, throwing a party at home is cheaper. Buying food and non-alcoholic beverages in shops and supermarkets is almost 10pc cheaper. And it is 12.1pc less expensive to buy alcohol in a shop or off-licence now compared to 2009. Much of this has been attributed to supermarket price wars and the growing popularity of cheaper European stores.
Some popular gifts are also cheaper. According to the consumer price index, the average cost of games, toys and hobbies has halved in the past decade. Clothing and footwear costs are down 25.3pc as high street stores try to compete with online shopping.
Jewellery, clocks and watches are 6.1pc cheaper now compared to 2009.
However, families have to offset these gains against rising costs elsewhere.
Posting Christmas cards and sending parcels has become 62.9pc more expensive over the past decade. Buying a book is 10.6pc more costly.
Television services, which include the cost of cable or satellite subscriptions, online steaming and television licence fee costs, now hit families harder. These bills have risen by 17pc since 2009.
Hairdressing costs have increased by 10.5pc over the same period. And anyone considering booking a late deal to get away for the festive period will find package holidays are now 10.5pc more expensive than 10 years ago.
These increased costs are a result of an accumulation of price increases as the economy has recovered since the crash.
Mr McQuinn said year-onyear inflation remains quite low, at roughly 1pc. He predicts it will be a little over 1pc next year.
He said the current rate of year-on-year inflation is unusually low considering the strength of the economy. Brexit is a major factor, he added, nonetheless Christmas will still be more expensive for most families.
This is despite consumer sentiment dropping sharply in the past 12 months, with many households reluctant to commit to major purchases.
“That indicator has been falling very sharply since last November. We would attribute that to Brexit,” Mr McQuinn said.
“Even though underlying conditions are very strong in the Irish economy — unemployment is very low, the labour market is performing very well, consumer sentiment is falling and the only real explanation we have for that is Brexit-related issues.
“If you did not have Brexit and sterling had not fallen by as much as it has over the past year, the rates of inflation in the Irish economy would probably be a good bit higher than what they are.
“We think the low rate of sterling against the euro and dollar is probably helping us in terms of keeping inflation reasonably low. With unemployment falling as much as it is, that should be generating cost pressures in the economy. Unemployment is now down below 5pc, which is very low by Irish standards.”
Rising household costs such as heating are also a factor and will hit families harder over the Christmas period as temperatures drop.
On average, household bills are almost one third (32.7pc) higher than 10 years ago. Home heating oil has increased by 37.3pc on average over this period. Solid fuels are also more expensive.
The CSO data shows coal, briquettes, firelighters and similar products have increased in price by 13.8pc.
Anyone putting up Christmas lights might be cognisant of the fact electricity costs have risen 38pc on average since 2009.
Meanwhile, renting in the private sector increased more than two thirds over the same period, leaving many families with less disposable income. The CSO data shows these rose 69.3pc. Local authority rents have increased 15.3pc over the same period.
Christmas regularly comes with reminders that pets are not a suitable gift. Increased pet costs are something anyone thinking of buying an animal should also consider.
According to the CSO figures paying for pet food, veterinary bills, animal care products and services, and pet treats, beds and similar goods have increased in cost by 11.8pc over the past 10 years.
Price inflation will continue in 2020, Mr McQuinn said.
“Our expectation for next year is that inflation will be just over 1pc next year, which is still reasonably low considering the economy is performing reasonably well.”