Thomas Lyons 
High inflation periods are rare, but they can be easily forgotten. The cost-of-living crisis we are currently experiencing was created after global economies rebounded from their pandemic lockdowns and then faced the financial fallout from the outbreak of war in Europe. This crisis has similarities with the oil supply shocks of the 1970s. However, all eras of high inflation have one thing in common: companies are quick to pass on spikes in their wholesale or market prices, but are a good deal slower in passing on gains when wholesale price pressures ease. This phenomenon is so established that it gets its own name no matter where you land in the world. Companies seek to preserve profit margins and their returns to shareholders, which after all is what they are designed to do in a market economy.
The European Central Bank (ECB) president expresses dismay about inflation staying “too high for too long”, referring to stubbornly high levels of inflation across the eurozone, still running at 7%, and insisting there is more road to travel despite it aggressively hiking interest rates since last summer. The American central bankers express the draining effects of inflation much better: Inflation is known “to shoot up like a rocket and come down like a feather”, according to a prominent US Federal Reserve banker. Experience teaches us that price pressures can be dangerous in Ireland, where 20 years ago the reputation for the State having one of the highest levels in Europe in energy and food prices was first being made. Since then, an elaborate structure of consumer watchdogs has been put into place.
Looking closer, there is good reason to believe that the consumer agencies have been landed with conflicting goals. The Central Bank is first and foremost part of the ECB system and the guardian of the Irish banking system. Its primary purpose is to ensure that Irish banks under its watch will never again threaten to topple the single currency, as they did over a decade ago. The Central Bank also has a remit to protect consumers, a dual mandate that many critics believe is impossible to achieve. The Commission for Regulation of Utilities (CRU), which is billed as Ireland’s independent energy and water regulator, has a longer pedigree. But it too has something of a mixed mission.
In one of the most bizarre decisions, the Competition and Consumer Protection Commission, or CCPC, was set up in 2014, its awkward name getting to the heart of the problem with consumer watchdogs in the State. The argument of the then Fine Gael and Labour Party coalition was that collapsing the National Consumer Agency into a super authority would bring expertise under the one roof. Critics say all regulatory agencies are staffed by officials who by the nature of such things cannot act as forceful spokespeople for consumers. Governments palm off consumer matters knowing that regulatory agencies they set up were not designed to be forceful advocates. They are agencies naturally reined in by EU law. They face lawyers from powerful companies should they think of testing the limits of their powers.
What the State needs is an independent consumer voice that focuses on households on fixed incomes and low incomes. One of its remits should be to keep reminding banks they are monopolies by dint of licenses awarded by the State. The Rip-off Republic moniker was coined twenty years ago when prices were surging as the banks pumped up credit and companies cashed in. Since then, Ireland has come a long way in terms of consumer protection, but there is still a long way to go. The State needs to ensure that consumer watchdogs are given the power to act as forceful advocates for consumers and that they are staffed by officials who are willing to fight for the rights of ordinary people.
The current cost-of-living crisis is a reminder of just how important it is to have strong consumer watchdogs in place. Companies are quick to pass on price increases, but they are much slower to pass on price decreases. This means that consumers are often left paying more than they should be for goods and services. It is up to consumer watchdogs to ensure that companies are held accountable for their actions and that consumers are protected from the worst excesses of inflation.
In conclusion, the State needs to ensure that consumer watchdogs are given the power to act as forceful advocates for consumers. They need to be staffed by officials who are willing to fight for the rights of ordinary people. The current cost-of-living crisis is a reminder of just how important it is to have strong consumer watchdogs in place. Companies are quick to pass on price increases, but they are much slower to pass on price decreases. This means that consumers are often left paying more than they should be for goods and services. It is up to consumer watchdogs to ensure that companies are held accountable for their actions and that consumers are protected from the worst excesses of inflation.
