The price of inflation

Assessing the impact of price increases on students’ finances

The price of bread has sparked riots and toppled empires. The price of milk has exposed the blue-collar charade of many a politician. What is left to be seen is the hold of modern prices — delivered from the landlord or the bartender — over the student.

The Irish economy has recently seen the highest level of consumer price inflation in 20 years, hitting 5.3% in the 12 months to November 2021, according to the Central Statistics Office (CSO). This record hike follows the deflation seen in 2020 and arrives concurrently with society’s gradual, nonlinear return to some sort of new normality. The sectors most contributing to the 2021 inflation figure were transport; and housing, water, electricity, gas, & other fuels; accounting for 2.07 and 1.92 points of the 5.3% total respectively. In terms of their internal increases, transport finished first with 16.2%, and housing came in as runner-up with a 12% rise on its 2020 cost.

The rise in transportation costs might not directly affect students in an equal way, especially as young people will enjoy a 50% discount on public transport thanks to measures introduced as part of Budget 2022. But this jump in oil and gas prices can bleed into other sectors of the economy that do more seriously impact students. With natural gas prices up by almost 50% and petrol prices by over 26%, prices of many goods and services will show knock-on effects soon.

Still, what matters most is not necessarily what increases in price the most, but what consumers care most about. The issue of housing, ever-present in the national discourse, looms far larger than transportation and cannot be avoided on college campuses because of how much of students’ cost of living it represents. Alongside mortgage interest repayments and utilities, the rise in the housing portion of the consumer price index can be attributed to higher rents, which are up by at least 8%.

A large section of Dublin’s student population already lives a commute away from the city centre, as Irish students choose to rely on their families and friends as a cheaper alternative to renting accommodation. Purpose-built student housing, on the other hand, is overwhelmingly for international students, with a 2019 report revealing that they make up 79% of the tenants.

“Among many students, there is a general impression that inflation may be integral to living in Dublin.”

The other grievance ubiquitous around campus is the price of alcohol. This cornerstone of students’ social lives has enjoyed social recontextualization as young people who had not previously experienced nightlife in Dublin due to the pandemic get their first proper taste. As the pubs, clubs and house parties readmit Trinity students, many have found themselves surprised and even scandalised by the price of drinks. Most of these complaints focus on a surge in the price of alcohol served in clubs and less on purchases at an off-licence or supermarket.

Second-year student Fem Yuzbasioglu expressed frustration and disappointment at the cost of socialising in the city: “People were quite upset about it and I hate that we pay quite a lot now, since three to four drinks is like €40, which is way too much.”

Among many students, there is a general impression that inflation may be integral to living in Dublin. The capital has the highest cost of living in the country, far ahead of any other city or town in Ireland, and is one of the most expensive cities in Europe overall. To many students, there’s no reason to believe price rises will stop, as Dublin living becomes more and more expensive.

Comparing the college experience with her sister, a Trinity alumna of the class of 2019, Annie Neill agreed with Yuzbasioglu’s frustrations — noting that even within a short period, she had noticed price rises on already-costly drinks: “They were super expensive even a few years ago and have probably gotten even more expensive now, which I can attest to because that gin and tonic I got [on one recent night out] was €9.”

Amongst students, there is complete consensus regarding hiked alcohol prices. This begs the question: what is the correlation with general inflation on a national level? Alcoholic beverages and tobacco, as a statistical category, increased by 3.4% in the 12 months to November, primarily because of the rise of wine prices in supermarkets and off-licences. But students’ gripes over alcohol at clubs and pubs are not anecdotal. A 3.9% rise in the restaurants & hotels category stems in large part from higher prices of alcoholic drinks, according to the CSO.

But there’s a new kid on the block. General inflation won’t be the only rise in alcohol prices in 2022, as the implementation of a minimum unit price increase for alcohol came into effect in January. The law, part of the 2018 Public Health Act, is intended to decrease the harms of alcoholism, as Health Minister Stephen Donnelly explains, “This measure is designed to reduce serious illness and death from alcohol consumption and to reduce the pressure on our health services from alcohol-related conditions.”

“Tara Rossiter captures the confusion and frustration that many students feel today: ‘I’m not exactly sure how much of it is related to inflation and how much is related to public health campaigns, but I do know that a Malibu and Coke should not cost €12.'” 

It sets the minimum pricing to 10c per gram of alcohol, leading to a higher cost for beverages with higher alcohol concentrations. Most of the effects will be on the cheapest options at supermarkets, with some stores seeing an increase of almost 50% in products like beer slabs. But even though it is intended to impact supermarkets and off-licences and is specifically intended not to cause a change in prices for restaurants, pubs, and clubs, it has the potential to do just that. While these establishments often apply markups far above the statutory minimum, the wholesale prices of cheaper alcohol have risen. To maintain the same margin as in 2021, there might need to be a further increase in price, unless establishments are willing to sacrifice profits. Moreover, drink specials could be pricier for venues than they used to, meaning potential price increases for the consumer or the end of such promotions.

But perhaps many people would be happier not to know how the sausage gets made. The origin of the increase has little bearing on the students’ experiences of price rises. Trinity student Tara Rossiter captures the confusion and frustration that many students feel today: “I’m not exactly sure how much of it is related to inflation and how much is related to public health campaigns, but I do know that a Malibu and Coke should not cost €12.”