Ireland’s Soaring Costs: Why Prices Are So High

Ireland now holds the unfortunate distinction of being the second-most expensive country in the European Union. This is not welcome news for residents. A complex mix of economic conditions, government policies, and the nation’s unique geographic makeup contributes to this economic reality.

Expensive Groceries, Hefty Taxes, and Energy Costs

Certain categories of goods and services are particularly costly for Irish consumers. While clothing and footwear prices align with the EU average, groceries are nearly 15% pricier. Energy costs are 17% higher, while alcohol and tobacco prices are a staggering 105% above the European average.

One contributing factor is the cost of importing goods. Because of Ireland’s island status and dispersed population, transport expenses are higher. Also, market competition is reduced because of the country’s small population, which in turn leads to higher prices.

The Price of a Pint and the High Cost of Energy

The government’s decisions also play a significant role in Ireland’s high price levels. Minimum unit pricing and high taxes on alcohol have a huge impact on consumer costs. The cost of a bottle of wine, for instance, can be around €8, whereas the average price in Portugal is just €4.

“Minimum pricing to help reduce these harms, and some evidence to suggest that the policy has already reduced the burden on the health service and the average level of alcohol consumption in Ireland.”

—Person Name, Title

Ireland’s reliance on fossil fuels and its dependence on imports expose the country to external market shocks. Moreover, delays in renewable energy projects contribute to elevated wholesale electricity costs.

Government spending decisions have influenced the high cost of living in Ireland. Despite a commitment to limit spending increases, spending rose significantly. In 2022 and 2023, these actions added about a half-percentage point to inflation. Overspending has added at least €1,000 to the average household’s annual costs, according to recent estimates.

Wages vs. Prices

The purchasing power of those with higher incomes is greater than their European counterparts. However, a substantial number of Irish households struggle. In 2024, nearly 16% of people were unable to afford two or more essential items.

Despite the high cost of living, Ireland also boasts very high wages. The average full-time annual salary is third-highest in the EU, behind Denmark and Luxembourg.

A recent report from the Central Statistics Office reveals that the average weekly earnings in Ireland reached €907.38 in Quarter 4 2023. This is an increase of 5.5% compared to the same period in 2022 (CSO 2023).