Price of food, electricity and building materials jump again in July

Already under pressure, Irish consumers may be staring down the barrel of even higher prices for staple items such as fish and dairy products in their weekly shop over the coming weeks, new data from the Central Statistics Office (CSO) indicates.

Published on Monday, the latest wholesale price index shows Irish food producers were charging retailers and other intermediaries 10.8 per cent more for their produce in July than a year previous and 2.2 per cent more than they were in June.

Food made the largest single contribution to the overall index of factory gate prices for products sold on the domestic market, which has risen 9.5 per cent since July 2021 and 2.4 per cent since June, the largest monthly increase since at least 2015.

Up 3.2 per cent in July alone, prices charged by Irish dairy producers have climbed almost 53 per cent in the past 12 months, the figures suggest. Fish prices, meanwhile, increased 10.9 per cent in July and were up 19.7 per cent since July last year.

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Published earlier this month, the CSO’s consumer price index for July indicated that Irish households were paying 9.6 per cent more for a basket of consumer goods than a year earlier.

Jillian Delaney, a statistician with the CSO’s prices division, said retailers might be able to absorb these additional costs for a time but would eventually pass them on to consumers in the form of higher prices if the increases were sustained over time.

Food prices also tend to be volatile from month to month due to seasonal effects such as weather as well as speculation on global commodity markets.

However, underlying the increase in dairy and factory gate prices generally is the sharp rise in wholesale energy costs, which continued to accelerate in July, heaping additional costs on energy-intensive activities such as milking and manufacturing.

Energy prices were already on the rise globally before the invasion of Ukraine in late February, which has threatened supplies of natural gas from Russia.

Wholesale electricity prices – the prices paid by energy retailers on the Single Electricity Market for Northern Ireland and the Republic before supplying it to homes and businesses – rose by 86.3 per cent annually and 47 per cent from June to July. Utilities companies have passed these price increases on to consumers in the form of higher bills over the past year.

However, Ms Delaney said how and when consumers begin to see these increases depended on decisions made by electricity retailers. Last year, sizeable increases in wholesale energy prices – mostly due to rebounding global demand for natural gas as economies reopened – took several months to manifest in monthly household bills.

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On a more positive note for consumers and retailers, wholesale petrol (up 21.9 per cent since July 2021) and diesel prices (up 31.4 per cent since July 2021) declined 4 per cent and 3.5 per cent respectively on the previous month in line with a fall in global oil markets over the summer.

Wholesale construction materials prices, however, were 20.6 per cent higher at the end of July when compared with a year previous.

In its July purchasing managers’ index for the construction sector, published last week, BNP Paribas Real Estate Ireland said there was some evidence that the rate of price increases for materials, while elevated, may have peaked over the summer months.

The CSO figures indicate that the price of some timber products, including treated wood, had more than doubled in 12 months while steel and reinforcing metal prices jumped 46.7 per cent over the same period and over 10 per cent in July alone.