The cost of living crisis will cost the average Irish household €4,000 a year, a top finance expert has revealed.
Financial advisor Karl Deeter calculated the cost of price hikes across daily life in a detailed analysis for the Irish Mirror.
His data shows the extra charges will hit each family for an average of €2,787 after tax – but breadwinners will have to earn approximately €4,010 to pay for that.
His new research comes as the Government announced new measures intended to curb the effects of rising inflation.
Mr Deeter said: “This is a €4,000 smackdown. If you work for a living, this is how much more you’re going to have to earn to keep up. That’s the true cost.
“It’s massive. The cost of living crisis is real. The data doesn’t lie. If you breathe, you’re going to be affected.”
Money and mortgage expert Deeter calculated projected percentage hikes on everything from energy costs to grocery bills to property increases.
Breaking down the data, he found that mortgage holders will be hit by extra costs totalling €2,525, while renters have it even worse at €3,050.
Energy bills are expected to go up by €500, with grocery bills rising by €780, rents averaging at an increase of €1,150, and petrol up by €625.
Mortgage rises, if they come, will hit homeowners with another bill of €625. And he added in creeping rises in areas like medical bills – costing €30 more – and entertainment costs, going up by €50.
The average hit for renters and homeowners is €2,787. An employee paying 20% tax will have to earn €3,437 to pay for this, while someone on 40% tax will need to earn €4,583 more. Their combined average is €4,010.
He explained: “If prices go up by €2,787, how do you pay for that? An important way to look at this is how much of your earned pay do you need to absorb that.”
He points out that while inflation is projected to go up by 4.6%, wage growth in Ireland is up 5.4%, adding: “If you didn’t get a pay rise, it’s like a back door pay cut.”
And he described the hike in the cost of living as “a smash in the face”, adding: “How it will affect people depends on their circumstance. Rising costs are like water moving up. If you imagine a ladder with 20 rungs and 20 people on it, all representing different wage levels.
“If you’re on the bottom rung, you’re going to get wet by that rising water. If you’re on the third, fourth and fifth rungs, you’ll still get wet.
“If you’re on the higher rungs, you might not go on an international holiday or buy a new television or car.
“But in general, people’s money won’t get them as far as it used to. They will be stuck in a situation where they just have less. Having less pushes you under in some cases, and you might go into debt. Others might not be able to pay bills. Anyone trying to save for a mortgage deposit will certainly feel it.
“The wealthy will be hit by the rising costs, as everyone is, but they won’t be affected. ‘Everybody is feeling it’ is a bull***t concept of economics. They’re not.”
The reasons for the global inflation crisis is due to several factors – including the disruption of the supply chain and the pushing of Green policies.
He said: “There is massive supply chain disruption everywhere, on everything. There’s a lot of stuff that feeds into that, such as the effects of the pandemic.
“To some extent the Green agenda is pushing people towards less reliable forms of energy and it’s more expensive and that has to be paid for.
"That’s part of why fuel prices are rising.” And the housing crisis in Ireland – unresolved since 2014 – is worsening the effects of inflation on people’s lives.
Mr Deeter – the founder of Irish Mortgage Brokers and Yes.ie online brokerage service – said houses went up by the same amount as the average workers’ take-home pay for a year.
He added: “The most recent figure for house price inflation is 14%.
“The average house price is €290,000. So house prices went up by about €40,000 in the last year on average. The average worker only earns €43,000. So a house, that sits there, rose almost as much in value a person who worked about 2,000 hours in a year. That is insane.”
And he claimed the Government’s moves to alleviate the effects of this latest crisis is “a pittance in the face of the size of the issue”.
He added: “They’re trying to deal with it in a simplified way. They’re giving the disadvantaged household €200, and the billionaire household €200. I don’t see the sense in that.
“We should be able to say, ‘If you’re earning below €20,000, you get €300; if you’re on less than €40,000, you get €250; if you’ve a salary under €60k, you get €200, and if you’re on over €100k, you don’t get anything.
“We managed pandemic payments over Covid and we managed to guarantee the banks during the financial crisis. We can manage this.”
