Irish food prices rising faster than EU average

A study by the European statistics agency has reportedly shown annual food price rises in Ireland have shot up way above inflation.

Reports this morning say the Eurostat figures show Irish food prices rose by 8.4% between April 2007 and April 2008, which is more than twice the rate of general inflation over the same period, and compares to an average increase of 7.1% in the other 27 EU member states.

Dairy products like milk, cheese and eggs have seen the highest increase in Ireland, with prices up 22%, although many of Ireland’s European neighbours have also seen a dramatic increase in these products.

Food prices across the world have been rising sharply for the past year for many of reasons, including high energy costs, rising demand, poor harvests and the increased cultivation of biofuels.

Since the end of 2006, food prices overall in the EU have increased more rapidly than the level of inflation. In April 2008, the annual increase in food prices in the EU was 7.1%, compared with the 3.6% level of inflation, which has caused consumers to tighten their belts and further exacerbate the problem.

On Tuesday, Fine Gael suggested a decrease in the level of VAT by 1% to reinvigorate the economy, and allow consumers to reach back into their pockets, although a serious debate on the issue is still pending.

In Ireland, these continental rises have all been compounded by a stark increase in the costs of production, rising by a relatively modest 6.2% on last year. However, the pinch being felt by the Irish agricultural industry at present has further led to an increase in food imports and decrease in exports in Ireland, resulting in hiked prices outweighing inflation.

The recent statistics will undoubtedly prompt politicians and economists in Ireland into looking again at the impact of the Lisbon Treaty, which could have major consequences for the Irish economy.

(DW/KMcA)