The sources of stress differ across regions. In developing countries, it’s food prices. In the US, healthcare often gets the blame. Medical expenses are the biggest cause of family bankruptcy in the US.
In Ireland, the chief culprits are energy and housing.
The global affordability squeeze seems to be getting worse, and the politics around it is getting noisier.
Cost-of-living issues now consistently rank as the biggest challenge for households globally ahead of issues like crime and immigration.
Donald Trump came into office in 2025 promising to fix the price storm engulfing US households only to aggravate it with tariffs and higher oil prices.
During the Celtic Tiger period, Fine Gael ran a high-profile campaign called “Rip-Off Ireland” to highlight the acceleration in prices here and skewer the then government for failing to tackle it.
But since coming to power itself in 2011, the party has – over the last 15 years – presided over a 100 per cent rise in house prices; 140 per cent jump in rents and 135 per cent increase in electricity prices.
These price hikes can’t be simply blamed on Fine Gael: the causes are multifactorial and stretch back decades.
But the increased costs have radiated out across the economy, impacting everything from the cost of your morning coffee to your insurance premiums and the food in your supermarket trolley.
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Ireland’s high energy costs (we pay 40 per cent above the EU average for electricity) are a function of our island status, poor infrastructure and a reliance on energy imports.
The State imports up to 80 per cent of its energy needs, making us a price taker internationally and therefore doubly exposed to recent oil and gas shocks.
A quicker switch to renewables might have shielded us somewhat, but a decision not to extend the main State subsidy for renewables to offshore and solar 15 years ago, combined with the slower-than-expected roll-out of onshore wind projects, has left us more reliant on imported fossil fuels than most of our peers.
The big game-changer could be offshore wind but we’re still five years off having one operational farm in Irish waters (the existing Arklow Bank operation is now being decommissioned).
The State’s housing saga also dates back decades. In the 1980s and 1990s, the State stopped building social housing at the level required and sold off much of the existing stock, switching to providing rent subsidies instead – the so-called switch from bricks to benefits.
This has created a logjam in the rental market and an explosive housing market generally.
In a report last year, the Department of Finance forecast that the State’s housing crisis was likely to persist for at least another 15 years.
Housing demand was not expected to peak until the early 2030s, it said, with “pent-up demand” not fully eliminated until at least 2040. That’s a bleak assessment.
Governments globally are increasingly ineffectual at getting to grips with affordability. And throwing untailored energy credits at the entire population are political sops that merely fan prices further.
Economists in the Central Bank and the Irish Fiscal Advisory Council (Ifac) often get it in the neck for being ivory tower technocrats, out of touch with the realities of politics.
Calling on the Government to rein in public spending or save a bigger slice of the corporate tax pie when there is a cost-of-living squeeze is, politicians will say, easier said than done.
But the economists have a point. Constantly adding to demand through tax cuts, additional spending or untailored cost-of-living subsidies in an economy already running at close to full capacity merely stokes further inflation.
This requires more spending down the line to pay for the higher cost of goods and services, leaving the government and the population – in effect – chasing their tails.
Ifac estimates that Government budgetary policy added 1.9 per cent to inflation here between 2022 and 2025.
Making relatively well-off households digest global energy price hikes which the State has no control over is the correct response to the current geopolitical turmoil.
Taking steps to address affordability is hard. It requires strategic investment to expand the supply of goods and services which are inelastic: housing and energy being the two obvious examples.
The danger is that this process gets derailed by populism. The intersection between immigration and the cost of living is being cleverly exploited by politicians in the US and the UK. Ireland’s political system remains relatively stable by comparison.
But a global slowdown and a pickup in unemployment on the back of high prices and increased borrowing costs could polarise politics further.