Cost of living increases continue to have a substantial impact on low income households and older people - Poverty Focus 2025
The rapid increase in prices that emerged from mid-2021, whilst slowing, continues to persist. This poses particular challenges for low-income households. The cost of core essentials has risen sharply and households on low and fixed incomes, particularly those reliant on social transfers are having to make impossible choices in order to remain within their weekly budget.
In Poverty Focus 2025, we focus on the nature and experiences of poverty in Ireland. Drawing on the available statistical evidence, we outline how poverty is measured, the value of the poverty line and consider many of the groups in our society who are most exposed to living life below the poverty line. This year we pay particular attention to the impact of cost of living pressures.
Impact of rising living costs on older people and low income households
According to latest Census there are more than 726,000 people aged over 65 years in Ireland and 190,000 of them live alone. Looking at poverty by age group, the most recent CSO data shows that 13.3 per cent of those aged above 65 years, more than 106,00 older people, live in relative income poverty. This is an increase of 64 per cent compared to 2023. The CSO data also shows that without the temporary cost of living measures in 2024 the poverty rate among older people would have been 21.1 per cent. As these temporary measures wind down, the true picture of poverty among older persons will reveal itself in future data and this is a notable concern.
The impact of inflation is greatest for those households in the bottom four deciles of the income distribution. These households spend a greater proportion of their income, compared to better off households, and are more exposed to price increases. They are also very exposed to the nature of the current cost-of-living crisis as they also spend a greater proportion of their income on food and energy.
As inflation persists, policy will need to more impactfully target these households and further assist with the growing living cost challenges they face. Despite declining inflation, cost-of-living pressures remain a challenge for those on the lowest incomes. While the number at risk of poverty has fallen, the deprivation rate has actually risen, reflecting the damaging impact cost-of-living pressures.
Poverty Focus 2025: key findings
- More than one in every ten people in Ireland lives on an income below the poverty line (11.7 per cent of the population). Based on the most recent Census data, this corresponds to more than 629,000 people.
- Without cost of living supports the at risk of poverty rate would have been 14.1 per cent.
- While these measures supported vulnerable households, particular people aged over 65, most of these measures are one off in nature. This presents a particular challenge to Government in terms of the long term economic and social impact of rising cost on low income households as these temporary measures wind down.
- When poverty is analysed by age, the 2024 figures show that just over 15 per cent of children aged under 18 are living in relative income poverty, more than 190,000 children.
- More than 106,000 pensioners are living in poverty an increase of 64 per cent in once year.
- About 140,000 workers are living at risk of poverty, 6 per cent of those who are employed. Poverty figures for the working poor have shown little movement over time reflecting a persistent problem with low earnings.
- Income inequality has remained stubbornly stable over the past fifty years. While the total value of income has increased, not much has changed about its distribution. The share of total household disposable income going to the top quintile (20 per cent) of households between 1973 and 2022 has steadily remained between 40 and 45 per cent.
Targeted measures that prioritise those households with the least resources and the most needs can yield welcome poverty reductions. However, these anti-poverty interventions need to be sustained; something than has been lacking in recent budgetary policy.
Impact of high prices on disposable income
Poverty rates are calculated using disposable income – the post income tax and welfare transfer amount individuals and households have to make ends meet. The standard of living this income can provide is further influenced by the recurring day-to-day costs individuals face and their ability to afford these. Ireland’s consumer price levels are notably out of line with those in other EU states. Ireland had the second highest price levels in the EU in 2023 with Irish consumers paying more for most areas of day-to-day spending including:
- Health (+82 per cent)
- Government services (+40 per cent)
- Communications (+37 per cent)
- Energy (+20 per cent)
- Food (+11 per cent)
- Appliances (+8 per cent)
- Transport (+7 per cent)
Reducing Poverty – policy priorities for Government
Social Justice Ireland believes that the next Government and policy-makers generally should:
- Acknowledge that Ireland has an on-going poverty problem.
- Acknowledge the failure to meet repeated policy targets on poverty reduction and commit sufficient resources to achieve ambitious and credible new targets.
- Adopt new, ambitious targets aimed at reducing poverty among particular vulnerable groups such as children, lone parents, jobless households and those in social rented housing.
- Link the value of all core welfare payments to movements in average earnings, so that welfare dependent households do not fall behind.
- Recognise the problem of the ‘working poor’. Make tax credits refundable to address the situation of households in poverty which are headed by a person with a job.
- Support the widespread adoption of a Living Wage so that low paid workers receive an adequate income and can afford a minimum, but decent, standard of living.
- Introduce a cost of disability allowance to address the poverty and social exclusion of people with a long-term illness or disability.
- Recognise the reality of poverty among migrants and adopt policies to assist this group. Including the full implementation of the White Paper on the Elimination of Direct Provision.
- Accept that persistent poverty should be used as the primary indicator of poverty measurement and assist the CSO in allocating sufficient resources to collect this data.
- Examine and support viable, alternative policy options aimed at giving priority to protecting vulnerable sectors of society.
- Carry out in-depth social impact assessments prior to implementing proposed policy initiatives that impact on the income and public services that many low income households depend on. This should include the poverty-proofing of all public policy initiatives.
- Introduce a universal basic income system. No other approach has the capacity to ensure all members of society have sufficient income to live life with dignity.