While it may feel to most people that this has been an annus horribilis of unrelieved gloom, on most price and cost-of-living indices there have been some remarkable reductions, while CONOR POPE
FOR MANY YEARS we’ve been complaining about rising prices, but this year the coin flipped and we entered a long deflationary spiral. While the near collapse of global capitalism, the death of the Celtic Tiger, the bursting of the property bubble, pay cuts and tax hikes have left us feeling understandably glum, we can find some crumbs of comfort in the cheapening of the country.
STORE WARS
At the beginning of May, Tesco shook-up the Irish retail sector when it rolled-out a massive price-cutting campaign which, it claimed, would see prices across its stores fall by an average of 22 per cent. The “Change for Good” campaign was initially introduced in Border counties as the retail giant attempted to stem the flow of shoppers crossing over in search of better value from its UK rivals Sainsbury’s and Asda. Over the course of the summer, the price cuts took affect throughout the Republic, leaving the other retailers little choice but to match many of these cuts.
The price war has contributed to a 7.6 per cent fall in the cost of food in the 12 months to the end of November.
POWER TO THE PEOPLE
While the household electricity market had, technically, been open to competition for nearly four years, energy suppliers were notoriously reluctant to actually deal with domestic customers, preferring instead to concentrate on more lucrative, easier-to-administer business accounts. It all changed in February when not one, but two, new players – Bord Gáis Energy and Airtricity – entered the market, allowing consumers to lop as much as 14 per cent off the regulated price that the ESB was charging.
NO JOB TOO SMALL
The days of builders turning up their noses at jobs they felt were beneath them, or charging big sums for small extensions, have been swept away by the bursting of the property bubble. While homeowners may feel for individual tradesmen who have lost their jobs, they are relishing the price drops and the sudden availability of plumbers, painters and carpenters. Shopping around has never been easier and never been more worthwhile. The Irish Times went looking for a painter in October. The first quoted €4,600 for a fairly small job – four others quoted under €3,000.
Tender prices for the construction industry have fallen to levels not seen since 1999 and the rate of deflation is accelerating, with prices down 10.5 per cent in the first six months of 2009 and 17.3 per cent since September 2008.
MORTGAGE RELIEF
In October 2008, a person with a €300,000 variable rate mortgage spread over 30 years was paying €1,713 each month. After five rate cuts in six months from the European Central Bank, the repayments on the same mortgage fell to €1,234 by the middle of March – a monthly saving of nearly €500. Not everyone benefited from the cuts and, during the early part of the year, the airwaves were filled with the stories of poor unfortunates stuck on fixed rate mortgages and unable to break out of them without attracting savage penalties from their banks.
CHEAPER RENTS
People in rental properties also benefited from the downturn and over the year rents in many areas fell back dramatically. According to the third quarter Daft.ie Rental Report, which was published in November, there was an average national reduction of 18.4 per cent over the 12 months to October 2009. The average monthly rent in the State is now €775. In Dublin, rents have fallen by an average of 24.5 per cent from their peak levels and 20.7 per cent in 12 months. Rents in Dublin are now lower than in the first quarter of 2000.
LESS FOR ROAMING
Mobile phone roaming charges have been one of the great rip-offs of our age, but the operators were finally brought to heel by the EU this year. In July, the European Parliament approved new measures for capping the amount mobile operators can charge. The biggest change was in the area of data transfer and prices for sending e-mails or web browsing, while roaming charges were capped at €1 per megabyte. That will fall by a further 50 cent per megabyte by 2011 – that’s 20 times less than some Irish operators were charging at the start of the summer. A call ceiling of 43 cent a minute for outgoing calls and 19 cent a minute for incoming calls was also introduced and it will fall further – to 35 cent a minute for outgoing calls and 11 cent for incoming calls by 2011.
FLAT-PACK HEAVEN
It took years of negotiations, planning and road-building for it to happen but, finally, with all the hurdles cleared, Ikea opened for business in July and Irish people got to marvel at the low prices the store charged for everything from flat-pack furniture to Swedish meatballs. And they liked what they saw. It took less than three months for it to welcome over a million shoppers. Ikea says 15,000 people a day visited the store in the first month, and the average number of daily visitors now stands at more than 12,000.
RE-OPEN FOR BUSINESS
In 2006 amazon.co.uk stopped shipping electrical goods to customers in the Republic saying it was due to problems it had implementing the Waste Electronic and Electrical Equipment (WEEE) Directive, whereby retailers and producers have to take in old electronic equipment when new equipment is sold.
The company signed up to the Directive this year and resumed shipping electronics and a whole bunch of other stuff to Irish customers. The company now takes back old electrical equipment on a like-for-like basis, free of charge, in one of four recycling centres in Dublin, Cork, Galway and Kilkenny. A restriction on goods weighing over 30kg is still in place and things like mobile phones and light-bulbs remain out of bounds for Irish customers, but it’s still news to be welcomed although whether we have any money left to be shopping on amazon.co.uk is very much in doubt. The news got better later in the year when the online retailing giant announced that it would allow Irish shoppers to take advantage of free shipping when they spent in excess of £25 (€28.16).
EAT OUT FOR LESS
It continued to be a challenging year for the hospitality sector – according to the Restaurants Association of Ireland more than 80 per cent of restaurants are currently losing money. The downturn forced many restaurants to cut their prices significantly in an effort to attract diners through their doors with many high-end restaurants offering two or three-course lunches with wine for not much more than €20.
CAR DEALS
New car sales drove off a cliff this year and were down in excess of 60 per cent year-on-year. Inevitably, this meant that for cash buyers, there were great bargains to be found in both the new and the second-hand sector. Consumers interested in buying a new car will also have been cheered by the introduction of a scrappage scheme for cars of 10 years or older which starts on Saturday. It gives a €1,500 cut in Vehicle Registration Tax (VRT) on the purchase of a car from band A or B with CO2 emissions of less than 140g/km when a suitable car is traded in against it.
