It's like the gently rising crescendo of the cicada song that fills Mediterranean air during the day, except that here it's a rising crescendo of human voices, chanting almost as one, 'why is it so expensive in Ireland?' Two things have moved this question to the forefront of peoples' minds: summer holidays on the continent and the novel ability to make direct price comparisons thanks to the Euro. When you've bought wine on the continent for a couple of euro a bottle, or beer that you pay for in cents, you can't help but ask yourself 'why so?'
Sometimes it's the little things that make the most impact. I bought a round of drinks in my local bar in Italy a month ago for nine people. The bill was 8 euros. It's moments like this that make you blink your eyes in wonder. The more you walk into shops on the continent and look at the prices, the more you're filled with mixed emotions; firstly the pleasant feeling that everything appears to be a bargain and then a niggling feeling of dismay that once the holiday's over you'll be back to Irish prices.

Prices are affected by a number of factors. Perhaps the most significant is that when money is abundant, prices rise to absorb it. No doubt Ireland has seen ten years of unparalleled growth, and whilst many of us are waiting for the 'trickle-down effect' to spread the tiger's milk amongst all of its cubs, prices have risen apace with increased income. But market forces are not the only influences on the cost of goods and services; governments can have significant effects through legislation and taxation. For example, our absurdly high rate of insurance costs are largely the result of legislation, while cars and wine cost more here than in any other eurozone country as a result of high duties.

One of the most common conversations I had during my continental summer was the one that began 'Ah, Ireland, you are the richest people in the world now, n'est ce pas?' It seems our burgeoning wealth is no longer a secret, yet I always felt impelled to reply that income alone is no measure of a standard of living, after all, if everything you need to buy in order to survive is going to take up all your money, then you could as well live in Portugal on two-thirds of your Irish income, where goods and services cost two-thirds of what they do here. If wealth is to mean anything at all, we should talk of disposable income left after food, clothing and shelter. Still, the stories keep filling inches of newsprint, 'Ireland soon richest in EU' or 'Irish GDP soon to overtake Luxembourg'. Yet do we feel rich?

A recent survey by MRBI discovered that one in four people were convinced that prices had risen well above the level of inflation since the advent of the euro. As a weekly shopper myself I have exactly the same feeling, but let's look at some statistics. According to the Central Statistics Office, the annual inflation rate up to April 2002 was 4.8%, but is that right? Retail Intelligence conducted its own survey using a limited shopping basket and found a different outcome. In a price survey comparison between July 2001 and June 2002, Dunnes Stores clocked up a 14.6% price increase, Superquinn a 12.49% increase and Tesco showed price increases of 10.6%. That certainly feels closer to my experience than the 4.8% computed by the CSO, but then again the Retail Intelligence survey focussed solely on supermarket prices, whereas the CSO covers a broader base. Internal inflation aside, Eurostat, the European Union's statistical arm, has found that a list of goods and services which costs €100 in Ireland would cost less in 10 other European Union states based on 2000 prices. Put another way, Eurostat's latest cost of living report has found that Ireland is the second most expensive country in the euro currency zone.

For most people, income is spent largely on the three basics; food, clothing and shelter, so it's in these areas that we most notice and care about increases in costs. Housing has become so expensive it's a wonder any young couple can find the money to buy a house at all. When we arrive at the point that a ten-bedroomed chateau in Normandy, complete with parkland and outhouses, can be bought for less than a semi in suburban Dublin, you know that something's out of kilter. Out of a sense of pure mischief, let me run a conspiracy theory past you. It goes like this: back in the early nineties a lot of people owned their own homes and many had almost finished paying off their mortgages. Anyone in the business of lending money would have been looking to the future with apprehension, after all, if everyone owns their house, who are they going sell mortgages to? The solution is to fuel increases in the price of houses by making borrowing easy. This has two effects, firstly it makes existing home-owners feel rich and secondly it makes it hard for new buyers. So when a young couple try to find a deposit for their house, for many the only solution is to persuade parents to re-mortgage their now valuable family home to help fund a deposit. At a stroke, the lender now has two mortgages to profit from, one of which will cost the young couple dearly. Like any good conspiracy theory there are no hard facts to back it up, but yet it has a ring of truth. The fact remains that here in Ireland we have one of the most expensive housing markets in the world and some mortgage companies are looking hard at the Japanese model of a fifty-year mortgage that can be spread over more than one generation, a truly dismal prospect. In effect it would make the lenders the landlords and we the tenants.

It would be a hard world indeed if life were composed only of necessities. Alcohol is a drug of choice for many and tobacco for a diminishing number. The reason why they're both so expensive here is mostly because of government duties and taxes. We pay €2.70 in duty on every litre of wine plus VAT at 21% on the retail price, whereas the Germans, French, Italians, Spanish, Austrians, Portuguese and Luxembourgers pay no duty at all. When it comes to beer, the minimum duty in the EU is just under 2%, but the Irish Government charges nearly ten times that amount. We've told ourselves over the years that this isn't just taxation, it's really social engineering. The theory goes that high rates of duty and tax on the old staples of fags and booze are actually a means of discouraging our citizens from using them, thus improving their health. You may like to believe this fiction, but the fact remains that booze and fags are selling as well as ever, which means that the state's take from these items is also rising inexorably. In case you're not a smoker, cigarettes cost from €1.50 to about €3.50 depending on the brand in France and a little less in Italy, compared with over €5 here. When you consider how much revenue is raised by these taxes alone it's not surprising that the Department of Finance says it is opposed to tax harmonisation across the European Union.

I'm old enough to remember when we were asked to vote on whether Ireland should join the European Union or not. At the time much was said about eventual price harmonisation and soon cars would cost the same as in the rest of Europe instead of 40% more. The Irish government managed to obtain derogation after derogation on this one, and we still have the most expensive cars in Europe and the most expensive car insurance. There's a joke in Strasbourg that a visiting delegation of Irish politicians ought to be called a 'derogation'. Since our joining, prices have moved only in one direction, and that's not downwards.

When it comes to feeding ourselves we have much the same problem. We pay more for our food than most nations. This comes as a puzzle to people who learnt at school that Ireland was a major food-exporting nation. This a country that produces cattle and sheep in large numbers, and milk traditionally comes in a glut during the autumn calving season. The milk glut prompted the rise of indigenous cheese producers from the mid-eighties, a sensible economic policy to make the best use of Irish resources. And yet a kilo of basic, ordinary cheese costs around €8 on the continent and around €12 a kilo here, some 50% more. Is it the producers or the retailers who take this bonus? Some years ago a farmer taking a finished lamb to market would have been lucky to get £25, yet at butchers' counters that lamb would have retailed in pieces for well over £100. Someone somewhere, that mysterious Mr. Nobody, seems to be taking the profits that no one else will admit to making - a point that was made to me by Dermott Jewell of the Consumers Association.

But the biggest price differential can be found in the fruit and vegetable department. In France and Italy you can go to a market and buy a kilo of apples or oranges for less than the price of a single fruit here. It's true that Irish produce has been affected by bad weather, but considering so many of the fruits and vegetables on the shelves come from Dutch greenhouses, it's hard to understand why tomatoes at Dunnes Stores could have risen by over 40% in 11 months and why a medium-sized cucumber has jumped by some 90% over this time last year.

You may have noticed that I referred to fruit and vegetable markets. All over the continent, in every tiny town, at least once a week, there's a fruit and vegetable market where local growers from the large to the small put their wares on offer to the public. This ancient and simple system puts the producer into direct contact with the buyer. The grower gets more than he would from a wholesale merchant and the customer pays far less than he would in a shop. There's no one in the middle of the transaction to add to the costs. Not only is it a cheap way to buy, but you get fresher produce. A further corollary is that supermarkets are constrained to keep their prices down, as it's so easy to buy in the street markets.

The nearest we have to this in Ireland are farm shops and a few farmers' markets. Mark Michel's organic farm shop is about a twenty minute drive from me and there's a new farmers' market down the road in Laragh, so I'm better served than most. But farm shops don't have the same easy access as a local market just outside your door and the few farmers' markets tend to be dominated by speciality produce. The fact is you'd be unlikely to drive a good few miles just to buy a bag of spuds, a head of lettuce and a sprig of parsley. We're almost constrained to do our daily or weekly household shop in a supermarket, simply for the convenience of it. What that means, is that we've given the big chains the right to do the choosing on our behalf. They decide what colour of apple you want, what length you want your carrots, how straight you want your bananas, how seedless you want your grapes and what size of tomato will suit you best. Any supplier has to meet their specifications.

That means we've had to become specialised. There are potato growers, sprouts growers, lettuce growers and so forth, people who grow nothing else. Even if we had local markets the specialist boys would hardly be bothered taking a tiny fraction of one per cent of their crop to them. A specialised grower can only sell to a big retailer and that's exactly what happens here. I asked a grower I know if he could tell me why vegetables cost so much. This simple question unleashed a tirade directed at legislation. If you supply supermarkets, they require you to be registered with Bord Glas. Once registered you have to find the best part of €150,000 to build a bird and insect-proof packing house to the required specifications with hot and cold running water, tray-washing facilities as well as fork-lifts and palettes to ensure that trays never touch the ground. I won't bore you with the rest of the requirements, but the paperwork is horrendous. The obligatory daily check-list covers around 150 items all of which have to be filled in and they are regularly inspected by Bord Glas, and that's before you fill in the supermarket's own check list.

All of this is designed to ensure that vegetables are hygienically picked and packed before arriving on the shelves, a worthy and entirely sensible thing. The trouble is that it doesn't come free of cost. Where once recyclable trays could be used, now sanitised trays at 40 cents are the norm. Protective clothing, plastic gloves, hairnets and boots all have to be provided. When they're picking there have to be portaloos every 300 yards with hot and cold water out in the fields. The government inspectors, from Bord Glas to the Weights and Measures, and the bureaucracy that supports them, all have to be paid for and it all gets loaded onto the price you pay in the shops. Don't forget, this is all because it's assumed that you're unwilling or unable to wash the vegetables when you get them home.

That's the difference between here and the continent. Those continental street markets aren't subject to this raft of regulation. Anyone who grows anything can pick it, put it in a trailer and take it to market. If the grower had a pee while picking tomatoes no one knows and no one cares - they'll be washed anyway. Without intervention from government, the prices are kept low. You might well bemoan the demise of the Moore Street trader, the last place in the capital where fruit and vegetables could often be bought for as little as a third of supermarket prices.

No one that I know of ever got sick from eating vegetables, but if you think the regulations I've outlined are Kafkaesque, the ones that apply to the meat industry are even more so. The more I found out, the more I began to get the feeling that the mysterious Mr. Nobody who eats away at profits and pushes up prices was being uncovered. The reason that a farmer gets so little for his livestock and you pay so much at the butcher's has a lot to do with the expenses that abattoirs are forced to make, to keep up with ever more labyrinthine regulations. The dead hand of government is there at every turn.

When you ask yourself why we need all these regulations and all this paperwork, only one answer comes; insurance. As a nation we're litigious. The courts are an easier route to riches than the Lotto and the odds are better. A bug in a punnet of cherry tomatoes could be a ticket to wealth, so that's why the paperwork that goes with their packing is so detailed. It's so detailed that if someone cuts their finger anywhere near a packing room, they have to wear special plasters that contain a metal strip so that if a plaster fell into a package it would get picked up by a metal detector. Somebody along every step of the paper trail has signed something, and blame can be pin-pointed and apportioned. You need insurance at every step as well, and that pushes up prices. I spoke to Karl Purdy of Bond restaurant and he told me that last year his insurance was £4,000. This year they wanted €25,000. Eventually he got it for €16,000, but there's only one way that this increase can be met and that's by hiking his prices. I know that this is anecdotal evidence, but it's in line with other findings. In a survey of 500 retailers conducted in the second week of July this year, 71% said their insurance costs had increased this year, with a staggering 28% experiencing increases of over 70%. The average increase was 43%, so expect to find that mirrored in prices in due course.

It's the classic vicious circle. No matter what you do for a living you have to charge a lot for your goods or services, because whatever you need to buy will cost a lot of money. A tourist from the eurozone would find Ireland staggeringly expensive. In France there are many hotel chains like Formule 1 and Premier Classe where a room for three people costs under €30 for the night. You'd be lucky to find a bed for one person here at that price. Restaurants, too, are more expensive than on the continent, but their running costs are significantly higher, largely because of spiralling wages and the high cost of the raw ingredients. These days a restaurant would be lucky to keep wages at under 40% of turnover and ingredient costs at less than 35%. That's already three-quarters of your bill, after you've subtracted the 21% of it that the government takes in VAT. That doesn't leave much to pay for light and heat, insurance, maintenance, breakages and dare I say it, a profit?

A week ago I was sure that simple greed was the answer to the question 'why is it so expensive in Ireland?' Now I'm sure that's not the answer. Greed may well be a part of the equation, but if it is, it's a small part. The simple truth is that the money has to come from somewhere. If people keep suing and claiming from insurance companies we all get to pay for it in the end with higher prices. If we want a nanny state that protects us from ourselves at every turn, then we have to pay for the people who are put in place to protect us. Everything comes with a price and the person at the end of the price chain is the consumer - that's you and me. But the question we really ought be addressing is are we getting value for our money? Are those well-meaning government agencies really contributing to our common weal? Do we really need so many layers of expensive bureaucracy? Just as an example, there's a chemical that was much used by blackcurrant growers that has been banned by Bord Glas on the grounds it may have deleterious effects on our health. Worthy enough. But it's still legal in the UK, so that's where all the blackcurrants come from, now that the Irish growers can no longer do the job and you still get to ingest the chemical.

Back in the dim recesses of the last millennium Ireland was viewed from abroad as a Good Place to Invest. The workforce was highly educated and in international terms not expensive. Added to that, Ireland was a part of the EU and was a useful launching pad for that market. But things have changed now that we pay ourselves so highly. The attractiveness we once had to foreign investors is diminishing as costs rise. Once upon a time a government could keep costs down for foreign investors by the simple expedient of devaluing the currency, but now that we're a part of the Euro, that corrective device is no longer an option. There's a real danger that we're pricing ourselves out of the international market.

There are anomalies that I've been unable to account for. Go to a supermarket in France or Italy and a 1.5 litre bottle of local mineral water costs between 15 and 30 cents. Buy a six pack of water and nine litres are yours for less than a euro. So why does it cost €1.30 for a 1.5 litre bottle of Irish water here - almost the price of petrol? Water is water all around the planet, even the PET bottles are universal. Is this profiteering, or is it something to do with distribution costs? If it's the costs of distribution, then it's hard to understand how they could account for the water costing an average of five times as much. Coffee is an internationally traded commodity, so you'd expect prices to be much the same in the eurozone. Not so; in France and Italy an espresso is less than a euro and a cappuccino costs just one. Why do we pay up to €2 for an espresso and well over that for a cappuccino? I'd suggest that it's a case of what the market will bear. If you're prepared to pay that much, someone will be happy to sell it at that price. Perhaps the Greeks had the right idea with a consumer boycott. The only way for consumers to fight back is simply to refuse to buy at exorbitant prices.

Thanks to: Dermott Jewell, Consumers Association, Chris Culleton, Ferrycarrig Hotel and Gerry Foley of the Central Statistics Office.

Useful web sites:
www.cso.ie
www.consumerassociation.ie
www.retailintelligence.ie