Paul Walsh On The CSO’s Consumer Price Index For August 2024

“While the news that inflation has fallen below 2pc for the first time in over three years will be a relief to consumers, the reality is that prices are still increasing – and from a much higher base. Consumers are still feeling the impact of the record-high inflation of recent years and this will continue for some time.

Furthermore, as we are now into the autumn, we’re starting to use our heating again – and to rely more heavily on lighting and electricity. So many families will start to feel the pinch of heating and electricity bills again. While a number of energy suppliers have thankfully reduced their prices recently, a new network charge kicking in this October will likely limit the extent to which suppliers can cut their prices any more. Indeed, some suppliers may decide to pass this charge onto their customers rather than to absorb it themselves.

Furthermore, the recent decision of the utilities regulator to increase the PSO levy from October 1[1] will push up customer electricity bills by €3.52 a month – or €42.25 a year (including VAT).

Let’s not forget too that the Government’s carbon tax on petrol and diesel is also set to increase on October 9 – this too will hit many consumers in the pockets.

It is crucial that despite the welcome continued fall in the rate of inflation, cost-of-living measures are very much at the heart of the Government’s upcoming Budget and that Ireland’s runaway prices are tackled. Recent indications suggest that energy credits are not on the table this year – and that the Government is set to extend the reduced rate of Vat[2] for gas and electricity in the upcoming budget instead. This however will not be enough to alleviate the pressure of higher energy bills on people’s pockets.

Furthermore, the reduced rate of Vat needs to be applied to much more than gas and electricity. Consumers are often hit with 23pc Vat when buying the goods and services they need, and this Vat can hugely push up costs for consumers. For example, if a driver needs to get a new tyre for their car, they’ll pay 23pc Vat. So the Vat on a tyre priced at €180 for example would come to €41.40, bringing the total cost of the tyre to €221.40. Irish consumers are long overdue a review of the 23pc rate of Vat.”

[1] See CRU publishes PSO levy calculations for 2024/2025

[2] 9%