Wholesale electricity prices fell by 41.4 per cent in January, one of the largest monthly falls on record, according the Central Statistics Office (CSO). Prices were also 19.5 per cent lower than those recorded in January last year.
Energy prices on international markets have fallen significantly in recent weeks and are now back to pre-Ukraine war levels. However, consumers may have to wait several months before seeing the reduction in wholesale prices reflected in their bills as the prices charged by energy companies are based on future prices, a process known as hedging.
“Energy suppliers buy their energy for delivery at different times throughout the year, and sometimes up to 12 or 18 months in advance through hedging,” said Daragh Cassidy of price comparison website Bonkers.ie “So the price households pay for their gas and electricity is usually an average price of the cost of energy on wholesale markets over the course of around a year or two.”
Mr Cassidy also noted that despite the recent price falls wholesale energy prices were still at a very high level.
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“At one stage during last summer the price of gas was up by well over 1,000 per cent on a yearly basis on wholesale markets. And last March the wholesale price of electricity in Ireland was up by over 400 per cent compared to the year before. So when we hear of falling prices we need to remember that it’s on the back of prices which were at record highs to begin with,” Mr Cassidy said.
The CSO’s latest wholesale price index indicated producer prices for food products rose by 6.2 per cent in the 12 months to January. Prices in several food categories were significantly higher in January, the CSO said.
Some of the most notable changes were in dairy products (+26.6 per cent), fruit and vegetables (+19.1 per cent), fish and fish products (+17.1 per cent) and grain, milling, starches and animal feeds (+15 per cent).
The index also indicated that domestic producer prices for manufactured goods were on average 8.2 per cent higher in January 2023 compared with a year earlier, while producer prices for exported goods increased by 3.5 per cent.
Wholesale prices for construction products increased by 0.6 per cent in the month and by 15.5 per cent in the 12 months since January 2022.
While headline inflation in most industrialised countries has begun to moderate, it remains elevated. Two sets of economic data from the US – one showing higher-than-expected export prices, the other showing accelerating producer prices – has also prompted speculation that inflation may remain higher for longer.
