Inflation up but energy regulator proposing lowering levy on electricity bills
HIGHER petrol and diesel prices at the pumps have pushed up the rate of inflation.
New figures from the Central Statistics Office show that overall prices rose by 0.6pc in May to send the annual consumer price index up by 0.4pc.
But there was better news for consumers when the energy regulator said it was proposing lowering the levy on electricity bills.
At the moment the annual public service obligation (PSO) levy is €92.28 a year before VAT on household electricity bills.
If the proposed decrease takes effect, the new annual cost of the levy will be €50.75.
The levy is to subsidise the cost of producing electricity from wind and from peat, and to keep power stations on stand-by to ensure there is security of supply.
Head of price comparison site Switcher.ie Eoin Clarke said that a decrease in the PSO levy – which all consumers must pay – will come as welcome news.
He said that last winter almost all energy suppliers hiked prices, and last week SSE Airtricity announced what he said was likely to be the first price rise of the summer.
“So a decrease in the levy is the first reprieve for consumers in some time.”
The final levy for this year and next will be announced later in the summer, and will then come into effect from October.
However, rising rents, hotel prices, airfares and car fuel sent the annual inflation rate up in May.
The big driver of higher prices was petrol and diesel prices going up.
Prices at the pumps have surged to a three-year high due to higher wholesale prices of a barrel of oil.
The higher prices mean the average driver is now set to shell out €100 more for petrol this year than they would over the course of last year.
A litre of petrol cost 141c on average in May – a rise of nearly three cents when compared with April’s figure of 137.6c.
The cost of a litre of diesel has also increased over the past month, from 127.1c in April to 131c in May, according to AA Ireland.
However, the Central Statistics Office reported that the average cost of motor insurance fell by 9.3pc in May compared with last year.
Although the annual rise in overall inflation is 0.4pc it comes after the inflation rate was negative in April, and after months of price rises being muted.
The devaluation of the value of sterling relative to sterling has been keeping a lid on prices up to now.
Economist with Merrion Stockbrokers Alan McQuaid predicted that inflation will rise modestly this year due to higher wage demands, particularly in the public sector.
He added that oil prices will be critical in determining the headline inflation outlook over the next year.