Updated figures from the Central Statistics Office (CSO) confirm that lower-income households continue to suffer more from higher inflation. In the year to June, inflation averaged 9.1 per cent but lower-income houses faced a rise in prices of up to 10.3 per cent.
The main reason is that they tend to spend more on home heating and energy as a proportion of their income than do better-off households. High-income households faced an annual rate of 8.2 per cent. Rural households, more reliant on car-based transport, also fared relatively worse than their urban counterparts.
The research underlines the point that the consumer price index, based on a fixed basket of goods and services, is an average and that each household experiences inflation in its own unique way.
The underlying picture is that everyone is being hit hard by higher prices, which are causing living standards to fall in most households, bar those lucky enough to get significant pay increases.
Will a European gas crunch affect Ireland?
Pretty much everyone is feeling the pinch of higher inflation. But the key point is that lower-income households, the ones being hit hardest, will have the lowest buffers to deal with this.
They are much less likely to have the kind of savings which many better-off households added to during Covid-19, or the same leeway in their weekly budget to cut back on non-essentials.
This creates tough policy choices for the Government in directing help in the budget, due in late September. Tánaiste Leo Varadkar has said that he believes some help should be focused directly on those most in need and that there should also be general measures to help all households.
The problem with general measures is that they cost a lot — by their nature — and as well as directing some help to the so-called " squeezed middle”, also give cash to better-off households who don’t need it.
With public sector unions also upping the heat on their pay, the run-in to the budget this year is going to be particularly difficult. And the risk for the Government is that, whatever it does, many interest groups will greet it as not being enough.
