THERE WILL NEED to be a “few more months” of falling wholesale prices before consumers see a reduction in bills, an expert has said, despite the price of wholesale electricity prices being 26.6% lower than it was a year ago.
Figures published by the Central Statistics Office (CSO) today show that there has been a decrease of 16.2% in wholesale electricity prices in the month to May of this year.
The price of electricity was 26.6% lower in May 2023 when compared with May 2022.
Despite the significant drop in wholesale prices since this time last year, Daragh Cassidy from price comparison website Bonkers.ie has explained that it may be some time before consumers see a reduction in their bills.
“The bad news is that wholesale electricity prices are still around three times what tjhey were in 2020, before Covid-induced lockdowns and then the war in Ukraine wreaked havoc with energy prices,” Cassidy said.
He said while the trend of falling wholesale electricity prices is good, “we’ll probably need to see a few more months” of prices dropping “before we see a reduction in electricity bills for households”.
“But I’m hopeful we might see some moderate price decreases of between 10% and 20% for gas and electricity customers before the year is out,” Cassidy said.
“However, gas and electricity prices would need to fall by between 50% and 60% on average to bring them back to the level they were at in 2020. And even then they weren’t cheap,” he said, adding that “further Government support will be needed for the winter”.
Cassidy warned that any further escalation of the war in Ukraine “could put upward pressure on prices again”.
“And if there is an extreme heatwave on the continent, leading to drought conditions, this could impact electricity output from European hydro plants and nuclear power plants, which in turn could indirectly affect us,” he said.
Cassidy further explained that the “price of gas has also fallen hugely on wholesale markets over the past few weeks, helped by good weather, low demand, and ample supplies of LNG into Europe”.
“However most suppliers will only have bought a tiny fraction of their supply at this recent price. Many will have bought supplies at much higher prices over the past few months to a year, which is keeping prices high,” he said.
“Due to hedging, it could be several more months before these much lower prices feed through into lower bills for consumers.”
The CSO figures released today also showed that domestic producer prices for manufactured goods were on average 5.3% higher in May 2023 compared with a year earlier, while producer prices for exported goods fell by 1.4%.
Producer prices for food products fell by 2.4% in the 12 months to May 2023, while the food products, beverages & tobacco index also saw a decrease of 1.8%.
Some of the most notable changes in producer prices for food products over the 12 months to March 2023 were: Fruit & vegetables (+17.4%), fish & fish products (+13.9%), dairy products (-8.8%), and grain, milling, starches & animal feeds (+3.9%).
The most notable changes in other producer prices in the year were: Beverages (+10.5%), oher non-metallic mineral products (such as glass, ceramics, cement, concrete and stone) (+8.9%), wearing apparel (+8.8%), fabricated metal products (except machinery & equipment) (+5.6%), basic metals (-10.8%), and wood & wood products (-7.6%).
Wholesale prices for construction products decreased by 0.8% in the month but increased by 9.1% in the 12 months since May 2022.
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