Ahead of Budget 2027, MESL 2026 Report shows essential living costs up nearly 24% since 2020 as social welfare falls behind

Single parents, with teenagers, dependent on social welfare have highest risk of deep income inadequacy.

The cost of achieving a Minimum Essential Standard of Living (MESL) has increased by an average of 3.8% over the past year and by 23.6% since 2020, according to the latest MESL Report launched today by the Vincentian MESL Research Centre at SVP.

The findings come as policymakers prepare for Budget 2027 and underline the growing challenge facing households dependent on social welfare and other fixed incomes, many of whom are struggling to keep pace with the rising cost of essential goods and services.

The Report also shows that the most significant cost pressures continue to come from Home Energy and Food, which together account for approximately one-third of the MESL expenditure basket.

The MESL 2026 Report key findings in Home Energy and Food are as follows;

• Home Energy costs increased by 24.9% in the year to March 2026 and have more than doubled since 2020.
• Home heating oil (rural MESL basket) has risen by 72.4% in the past year and is now 186.8% higher than in 2020.
• Natural gas (urban MESL basket) has fallen slightly by 3% over the past year but remains 84% above 2020 levels. Electricity (for cooking, lighting, etc.) has increased 25.6% in the past year and 77.7% since 2020.
• Therefore, while natural gas prices have eased slightly recently, all three energy sources remain substantially more expensive than they were in 2020, with home heating oil showing the largest increase.
• Food costs increased by 2.7% over the past year and are now around 20% higher than six years ago.
• While the annual increase is relatively modest, it adds to a longer-term upward trend that continues to push up the cost of everyday groceries.
• This ongoing rise places significant pressure on household budgets, particularly for lower-income families who spend a larger share of their income on food.

While overall inflation has eased compared to the peaks experienced in recent years, the Report demonstrates that households cannot avoid spending on essentials such as heating, electricity, and food, leaving many vulnerable families exposed to sustained cost pressures.

The Report shows that social welfare payments are still not enough to meet basic living costs for most people. Out of a set of 145 test cases considered during the MESL 2026 research phase, only about one in five households have an adequate income, while more than a third fall show a deeply inadequate income. Although this is an improvement since 2023, when most households were struggling to meet basic needs, significant challenges remain.

The MESL 2026 Report key findings regarding children are as follows;

• Single-adult households with older children (aged 12 years and over) dependent on social welfare show the greatest risk of deep income inadequacy reflecting the higher costs of raising teenagers.
• For children aged 0–12 years, social welfare now covers a greater share of needs than in previous years. Although it still falls short for school-age children, the gap has narrowed following an increase in the Child Support Payment this year, highlighting how needs-based, evidence-informed adjustments to the social protection system can help address income inadequacy more effectively.

Commenting on the MESL 2026 research findings, Robert Thornton, MESL Research Manager, said:
“The MESL research tracks the actual cost of meeting everyday needs and participating in society with dignity. While headline inflation may have moderated, the cumulative increase in essential living costs since 2020 continues to place significant pressure on households, particularly those relying on social welfare payments and fixed incomes. For many families, incomes have simply not kept pace with the rising cost of a minimum acceptable standard of living.”
“As Government begins preparing Budget 2027, the evidence is clear that social protection rates must move closer to adequacy. Budget decisions should be guided by the real cost of meeting basic needs. Without sustained action to improve income adequacy and protect the value of social welfare supports, the gap between household incomes and minimum living costs will continue to widen for many of the most vulnerable people in our society” continued Robert Thornton.

Drawing on the findings of the MESL research, the Report outlines four key priorities for Budget 2027.

1. Increase core social welfare rates towards adequacy.
   Commit to a phased, evidence-based increase in working-age social welfare payments to establish an adequate social protection floor that enables individuals and households to meet minimum living costs and participate fully in society.
2. Strengthen supports for older children.
   Increase targeted income supports for children aged 12 years and over to reflect the higher costs associated with adolescence and secondary education, ensuring families can adequately meet children's needs throughout their teenage years.
3. Address persistent income inadequacy in one-parent households.
   Introduce targeted measures to improve income adequacy for one-parent families, including enhanced household and child-related supports, to address the structural shortfalls consistently identified through MESL analysis.
4. Index social protection supports to the cost of living.
   Establish a mechanism to ensure that social welfare payments and supplementary supports, including Fuel Allowance, keep pace with changes in minimum living costs and maintain their real value over time.