Price Hikes Expected in Ireland as Inflation Eases Off
The general rate of inflation may be easing off in Ireland, but consumers can expect a series of price hikes in key areas in the coming weeks. Petrol, diesel, alcohol, streaming services, and transport services are among the items that will see an increase in prices, putting further pressure on households already struggling financially.
According to Daragh Cassidy, a representative from independent price comparison and switching site Bonkers.ie, motorists will face higher costs due to the restoration of excise duty on petrol and diesel in September and October. This will result in an additional 15 cents per litre of petrol and 11 cents per litre of diesel. In addition, there will be a €7.50 increase in the carbon tax in the October budget, adding approximately 2 cents per litre to petrol and diesel. These combined hikes will lead to an annual increase of €150 to €200 in fuel costs for the average driver.
The carbon tax hike will also affect consumers who use fossil fuels to heat their homes. It will add around €17 to the average annual gas bill and €19 to the cost of filling a 900-litre oil tank. This means households will be paying approximately €130 in carbon tax for their gas costs and a total of around €142 for their oil. However, there is a possibility that the implementation of the carbon tax increase on home heating fuels may be deferred until next May.
Another area where prices are expected to rise is in the alcohol industry. Diageo has already announced a 4 cent increase in the price of its pints, following a 12 cent hike earlier this year. Food inflation is also a concern, with prices still rising month on month, albeit at a lower rate. The recent decision by Russia not to extend the Ukraine grain deal has raised worries about global food supply chains and prices.
The suspension of the deal has already resulted in higher prices for grains and oilseeds, which will likely lead to increased prices for staple items such as bread, cereals, and pasta in the coming months.
Transportation costs are also on the rise. While bus and rail fares have fallen over the past year due to government action, Bus Éireann recently increased the price of its Expressway coach services by 5%. Additionally, internet subscription services are becoming more expensive. Spotify has announced a €1 per month increase in the cost of its individual and duo plans, while Netflix has raised its prices in the past and is cracking down on password sharing.
Airfares are another area where prices have significantly increased. Compared to last year, airfares are up over 34%, and the era of ultra-cheap travel may be over for good. Reduced capacity due to the COVID-19 pandemic, the closure of airspace in Europe due to the Ukraine war, and supply chain issues have all contributed to higher airfare prices. Climate change-related weather events are also expected to limit tourist destinations in the future, leading to further increases in prices.
Despite the expected fall in the general rate of inflation in the coming months, prices are still projected to increase in most sectors. The cost of living squeeze is unlikely to improve, especially considering that gas and electricity prices remain at record highs. There have been no price drops from major energy suppliers this year, and it is uncertain what energy supports the government will provide.
Furthermore, the recent interest rate hikes are starting to impact mortgage rates and payments. The European Central Bank has raised its main lending rate from 0% to 4.25% over the past year, which will have financial implications for Irish households.
In conclusion, while the rate of inflation may be slowing down, prices in various sectors are still on the rise in Ireland. The cost of living is expected to remain high, putting additional strain on households already struggling with financial pressures.