“Adapt or perish” was a phrase Charles Darwin used often when he researched and wrote about the origin of all species.
Whether he ever actually uttered these words is debatable, but the concepts they describe are what Darwin spent much of his career demonstrating.
It may be an unusual comparison, but this year in Ireland many people have had to continue adapting to financial pressures through no fault of their own in order to survive financially.
Despite government intervention, many people suffered from rising costs in all areas and had little choice but to try to get by.
This is despite the fact that Ireland’s inflation rate has fallen almost continuously in 2023, from 8.2% last December to 3.9% last month.
Although general price growth has slowed, prices have not fallen and the cost of living in Ireland is higher at the end of the year than it was at the beginning.
If inflation is a disease, its treatment has had some undesirable side effects.
Throughout the year, the European Central Bank continued its determined efforts to contain inflation, using its primary tool of interest rate hikes.
Increase followed month after month, and finally in October the bank decided to keep it at 4%.
The increased cost of financing slowed economic activity and thus achieved its intended goal of slowing inflation.
But it all created financial pain for mortgage holders, whose lenders passed on the interest increases.
For many people, their monthly payments have skyrocketed, adding thousands of dollars a year to their mortgage costs. Therefore, we had to adjust our household finances.
That was clearly evidenced in a study published by money advice and budgeting service MABS in early December. The study surveyed service users in Leinster.
Michelle O’Hara from MABS said: “Significant increases in mortgage repayments and rising costs of living are forcing many individuals and families to make very difficult decisions.
“Three-quarters of MABS customers in South Leinster have reduced their electricity use, heating use, non-essential spending and grocery spending to pay their mortgages,” she added.
A burden to carry.
Household budgets also had to adapt to food inflation. As this year ends, food inflation is still above 6%, far higher than general inflation.
This area where we all have to eat is the only area where no one can avoid price increases.
Anyone who shops is well aware that overall bills have risen steadily over the last year, despite the inclusion of high-profile price cuts on certain dairy-based products. .
All major supermarkets started reducing milk prices in April, but prices had risen by 24% over the previous 12 months.
I spoke to shoppers in Ennis, Co Clare, about their grocery bills just before dairy prices started to reverse.
One O’Connell Street woman who had just left the supermarket summed up her situation:
“You might go in this week and buy the usual things like bread, milk, tea bags, etc., but a week later everything’s just gone up by 5 or 10 cents. When you’re doing a big store, everything counts. .”
Another woman stopped to talk to me and said, “I was going to do my usual shopping, but then all of a sudden you come to the cash register and it’s at least 20 or 30 euros more expensive.”
Like overall inflation, food inflation continues to trend moderately. At the end of last year, it was over 12%, so this year it has actually halved.
Food inflation should fall further next year as lower energy prices further reduce processing and transportation costs.
In 2023, consumers faced record home heating and utility bills, putting a huge strain on household budgets despite government support.
However, as already pointed out, Energy costs are starting to fall again, with further reductions expected in the new year.
Meanwhile, costs in other areas, such as rent and private health insurance, are still rising.
The year also saw some important government interventions to support cost of living, with further interventions planned.
The energy credits that helped with last winter’s electricity bills have started to be paid out again, while benefits such as lump-sum social welfare payments, rent credits and reductions in public transport and tertiary charges have also given recipients a boost.
The free books initiative introduced in state schools is being extended to second level junior cycle.
Wages are also expected to rise.
The minimum wage will rise again by €1.40 an hour to €12.40 in January, and public sector wages will also rise.
Most private sector employees can also expect a pay rise of nearly 4%, according to employers’ group IBEC.
2023 was a tough year from a cost of living perspective. Once we can no longer see that view in our rearview mirror, we can only hope that the road will be a little easier.
Let’s welcome the new year!