Wholesale electricity prices fall more than 38% in year to January

Wholesale prices for electricity have fallen more than 38 per cent in the year to January, while producer prices for food products have dropped by about 10 per cent.

The latest wholesale price index published by the Central Statistics Office (CSO) shows that although electricity prices rose by 12.3 per cent between December and January, compared with January 2023 prices have fallen by 38.4 per cent.

Daragh Cassidy, head of communications at price comparison website bonkers.ie, said it was “encouraging” to see wholesale electricity prices continue to ease from spikes seen since Covid and the war in Ukraine.

However, he said even with the latest wave of price cuts announced by suppliers, residential electricity prices are 80-90 per cent above normal levels.

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“If wholesale prices remain close to where they currently are, then barring another economic shock of some sort, it’s likely we’ll see a third round of price cuts of another 10-20 per cent in the second half of the year as suppliers’ hedging strategies further unwind and they buy more energy at today’s lower prices,” he said.

Producer prices for food products dropped 9.8 per cent in the 12 months to January 2024, with the biggest fall of 28.4 per cent for dairy product prices, while prices for fish and fish products saw the largest increase, rising 5.9 per cent. On a monthly basis, food prices rose 0.3 per cent between December and January.

[ Yuno Energy cuts fixed-rate electricity prices for third time this year ]

Notable increases in other producer prices in the year to January included a jump of 22.7 per cent in the price of chemical products, and an increase of 10.3 per cent in the cost of beverages. On the downside, the most notable price falls in the 12 months were for wood and wood products (down 9.3 per cent) and basic metals (down 5.8 per cent).

Wholesale prices for construction products were down 0.3 per cent in the month to January 2024 and by 0.6 per cent annually.

Ian Lawlor, managing director of Dublin-based private equity firm Lotus Investment Group, said construction inflation figures were a “significant improvement” on this time last year, when annual inflation for construction materials was at 15 per cent.

“The slight fall in the cost of basic construction materials is good news for prospective house buyers, as this should ultimately reduce the cost of building homes – and in turn, help stop house prices accelerating,” he said.

He added that while the cost of materials is falling, rising labour costs driven by a shortage of manpower remains a “key challenge” for house-building, as well as planning permission delays.

Headline wholesale price inflation rose 2.2 per cent in the year to January, compared with annual inflation of 2.1 per cent in December, and 1.4 per cent in November.

Wholesale prices increased 1.4 per cent in the month to January, compared with a monthly fall of 0.6 per cent in December, and a fall of 0.1 per cent in November.

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