1.7 Consumer Price Index

Every month the CSO gather and publish the Consumer Price Index (CPI). This is designed to measure the change in the average level of prices (inclusive of all indirect taxes) paid for consumer goods and services by all private and institutional households in the country and by foreign tourists holidaying in Ireland. Approximately 50,000 prices are collected for a representative basket, consisting of 615 item headings in a fixed panel of retail and service outlets throughout the country. Based on these prices, the CSO can track the change in prices of goods over time.

Figure 1.5 displays the relative movement of the CPI since the start of this century. The dashed line represents all items included in the CPI basket of goods and between the year 2000 and 2021, which had gone from 75.1 to 104.2, an increase of 39%. In 2022 the dashed line rises sharply indicating a significant rise in the CPI for all goods. In 2022 it rose by 8% compared to 39% over the previous 21 years.

Over the past 22 years food and non-alcoholic beverages has risen from 92.5 to 101.8, a rise of 10%, while alcoholic beverages and tobacco have risen by 98%.

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Figure 1.5 Consumer price Index, 2000 to 2022 (Base Dec 2016=100)

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2022

• – All items
• Food and non-alcoholic beverages
• Alcoholic beverages and tobacco

Source: CSO (CPA01)

Since the second half of 2021 and continuing into 2022 the CPI has risen sharply. Prices rose by 9.2% in the year to October 2022, the largest increase since June 1984. An earlier section in this chapter, section 1.2, looks briefly at some of the reasons for the increase in the CPI. While the CPI is dropping slightly since its highest point in October 2022 it is remaining high but is moving in a downward direction during 2023.

Irish Food Prices Compared to EU Food Prices Eurostat produces European statistics in partnership with National Statistical Institutes, such as the CSO in Ireland and other national authorities in the EU Member States. The data Eurostat produce is based on similar data collected from each member state, to allow comparison of data from one country to another.

In figure 1.6, data from both Ireland and the EU 27 is shown for the Harmonised Index of Consumer Prices (HICP). Both the CPI, which is the official measurement of inflation in Ireland, and the HICP are designed to measure, in index form, the change in the average level of prices paid for consumer goods and services. A number of items included in the CPI are not included

in the HICP, such as mortgage interest, motor tax, house and car insurance, while imputed rentals for housing are included in the HICP.

Figure 1.6 outlines that since 2013 alcoholic beverages, tobacco and narcotics have risen the most both in the EU 27 and in Ireland. Food and non-alcoholic beverages in Ireland dropped in price between 2013 and 2021 but rose sharply in 2022, however they did not rise as steeply as in the EU 27.

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Figure 1.6 Comparison of EU and Irish Prices, 2013 – 2022 (2015 = 100)

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80 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

• – All-items HICP - EU27

• Food and non-alcoholic - EU27

•  Alcoholic beverages and tobacco and

• – All-items HICP - Ireland

•  Food and non-alcholic beverages

• Ireland

•  Alcoholic beverages, tabacco and

narcotics - EU27

narcotics - Ireland

Source: Eurostat

Price Levels of Food, Beverages, and Tobacco 2022: How Ireland Compares In June 2023, Eurostat issued a release focusing on the relative price levels of food, beverages and tobacco in 36 European countries. The country groups included in the analysis are the 27 European Union (EU) Member States, three EFTA countries (Iceland, Norway and Switzerland) and six candidate countries (Albania, Bosnia and Herzegovina, Montenegro, North Macedonia, Serbia and Türkiye).

Price levels for food, beverages and tobacco vary considerably across the EU Member States. In 2022, the prices for food and non-alcoholic beverages in Denmark and Luxembourg were 21% above the EU average, while in Romania they were 28% below the EU average. Non-alcoholic beverages were more expensive in Denmark at 39% above the EU average and least expensive in Romania at 20% below. Alcohol was priced in Finland at 114% above the EU average, while in Hungary it was at 18% below. For tobacco, the highest prices were observed in Ireland at 159% above the EU average, while the lowest were recorded in Bulgaria at 51% below.

According to the CSO report, Ireland was the most expensive country among 36 European countries for tobacco with Switzerland the most expensive country for food, Norway for nonalcoholic beverages and Iceland for alcoholic beverages. Amongst the EU Member States,

Luxembourg is the most expensive country for food, Denmark for non-alcoholic beverages, Finland for alcoholic beverages and Ireland for tobacco. The least expensive countries of all 36 are Türkiye for food and tobacco, North Macedonia for non-alcoholic beverages and Hungary for alcoholic beverages. Among the EU Member States, the lowest prices for food and non-alcoholic beverages are observed in Romania. Alcoholic beverages are least expensive in Hungary and tobacco is least expensive in Bulgaria.

Ireland’s position varied from being the most expensive for tobacco, to being the seventh most expensive for food overall, 13th most expensive for meat, seventh for bread and cereals, 23rd for fish and ninth most expensive for milk, cheese and eggs.

Table 1.4 Food Relative Price Levels

Food Relative Price Levels
EU27 Average	100
Most Expensive (36 countries)	(Switzerland) 165
Most Expensive European Union (27)	(Luxembourg) 122
Ireland	113
Least Expensive (36 countries)	(Türkiye) 63
Least Expensive European Union (27)	(Romania) 71

Source: Eurostat

Price level indices (PLIs) provide a comparison of the countries’ price levels relative to the European Union average: if the price level index is higher than 100, the country concerned is relatively expensive compared with the EU average, while if the price level index is lower than 100, then the country is relatively cheap compared with the EU average. The EU average is calculated as the weighted average of the national PLIs, weighted with expenditures from national accounts, corrected for price level differences.

PLIs are not intended to rank countries strictly. In fact, they only provide an indication of the order of magnitude of the price level in one country in relation to others, particularly when countries are clustered around a very narrow range of outcomes. The degree of uncertainty associated with the basic price data and the methods used for compiling purchasing power parities may cause minor differences between the PLIs and result in differences in ranking which are not statistically or economically significant.

Figure from page 25