Consumer voice still the least likely to be heard

The reaction to the latest monthly consumer price report was instructive. Every month, the Central Statistics Office prices 50,000 goods and every type of service from the price of a haircut to the average mortgage repayment. This representative basket of goods and services showed that consumer prices fell by 5.6 per cent in the year to June, probably the steepest decline than at any time since the 1930s. Some analysts took this as a cue to argue that price deflation had taken root. We were told that the good version of falling prices would restore competitiveness that was lost during the recent boom years and would in time lead to new jobs. Others worried that the reputed deflation would lead to a deflationary cycle of successive price cuts, lower profits and lost jobs. It was left to a handful of commentators to question whether the June prices report showed that consumer prices were falling at all. Exclude the effects of falling mortgage interest rates and the story that consumers are winners in this slump looks a lot more underwhelming. Indeed, when home costs are stripped out, the CSO survey showed that prices not only rose in June but also in the recent three months and climbed surprisingly 1.6 per cent in the past year. Instead of falling, prices have risen. This is astonishing for a number of reasons. The Irish economy will drop this year at one of the fastest rates, the international forecasters predict, in the advanced world. Yet, consumer prices are still rising. Then there is the over looked benefits that shoppers here should tap from the surging value of the euro. In the early 1990s, the Finns and the Swedes faced banking and unemployment crises when their banks imploded. But consumer prices did no rise substantially even when their currencies fell sharply. In Britain, consumer prices are not rising sharply despite sterling having plunged by up to 25 per cent against the euro in the last eighteen months. In Ireland, despite the huge economic forces in favour of the consumer, prices are still not falling. If prices are not falling dramatically during these times, then they never will. Evidence that Irish consumers are being overcharged is scattered throughout the CSO survey. Take out the mortgage costs, and prices rose. Strip out the effects of falling costs of energy prices, which are set on world markets, and consumer price surged 4.8 per cent in the past year. It gets worse. Prices of food and non-alcoholic drinks, at a time when supermarkets ought to be passing on the benefits of the euro, rose in June by 1 per cent and climbed by a huge 3.3 per cent in the past year. Significantly, retailers who face the fiercest competition, including furnishings and household equipment and clothing and footwear, appear to have dramatically cut prices. Clothing costs have slumped 12 per cent in the year, as big retailers appear to have started to pass on some of the benefits of the surging euro to shoppers. Arguably, shoppers spending euro in the Ikea furnishings store in Belfast have helped drive down prices in the Republic. Meantime, the big government-backed organisations that by name supposedly battle for the consumer, such as the National Consumer Agency (NCA) and the Competition Authority, are failing the consumer. The evidence is that there is no official voice standing up for the consumer each and every month when the CSO publishes its detailed surveys. The NCA belatedly started surveying retail prices North and South last year and reported what the hundreds of thousands shoppers already knew. It has failed to query why the surging euro is not benefiting the consumer. In its recent report, the Competition Authority skipped lightly over its main finding that the retail sector was dominated by two or three big retailers, or what it politely referred to as a 'concentration' of ownership. This is no longer good enough. The absence of a strong government-led consumer voice arguably led to the deepening of the economic recession into a slump. Every year since 1997, the National Competitiveness Council indirectly has shown how untamed consumer prices have destroyed jobs. This is what it had to say about prices and costs in the economy in its report published at the turn of the year: 'In terms of general consumer price levels, Ireland is among the most expensive locations benchmarked and has experienced inflation rates that are among the highest in the then European Union-15 group of countries. High Irish inflation is driven by price increases in housing, utilities, education, health and catering.' On other key costs, the council said: 'Key non-pay costs in Ireland compare poorly. These include property costs (both purchase and rental), electricity, waste, mobile communications costs and a range of services, such as accountancy, information technology and legal services fees. Childcare costs in Ireland are also amongst the highest in the comparator group Within Ireland, Dublin is particularly expensive across most cost types.' The government should be advised that ignoring the consumer has had costly consequences.