Isme: Ireland faces 'emergency' over energy prices
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Ireland faces an emergency by the autumn as energy prices head higher, the head of business group Isme has warned.
Chief executive Neil McDonnell said Monday’s price hikes on wholesale gas markets was further evidence that small firms such as those in retail, hospitality, and manufacturing, were facing increasingly tough times as they face into the uncertainty of another economic storm.
Isme is launching an analysis of energy costs as it warns that price pressures coming down the pipe are “just going to be too much for some of the small businesses to bear”.
Mr McDonnell said that the Government will have to avoid finding itself in the trap over adjudicating between consumers or businesses as it weighs the best mix for aid to be unveiled in its budget next month. Households and businesses were both facing an emergency, he said.
Isme cited the experience of a butcher whose monthly energy bill will rise to €4,500 from €2,000, even before the potential of higher power prices following the wholesale market price hikes on Monday. He said that small businesses require reassurance this winter and beyond that they won’t face an annual energy crisis.
Economist Austin Hughes said the wholesale gas price hikes will influence Irish and British gas prices.
Mr Hughes earlier this month estimated that Finance Minister Paschal Donohoe would need to deliver an energy package of between €1bn and €2bn in next month’s budget to make a meaningful contribution to shielding households and businesses from surging energy prices on wholesale markets.
On Monday, Mr Hughes said households and businesses will have to endure some sort of pain but said that a package at the upper end of his estimate of €2bn would now be required, and still allow the Government to post a budget surplus.
The inflation pressures at the factory gate were starkly illustrated by new figures which showed wholesale electricity prices had jumped 83% in July from a year earlier.
Wholesale prices of manufactured goods for the Irish market climbed 9.5%, while the prices of goods for export rose 6%, according the Central Statistics Office.
Wholesale prices for food climbed 11%, with dairy prices soaring by 53% and meat prices rising by 13%.
The wholesale price of building materials climbed 21%, with timber and other treated wood products jumping by 110%, and the wholesale prices of structural steel and reinforcing metal prices rose almost 47%. The latest evidence of wholesale building materials inflation will add to the costs of building homes and commercial property.
Wholesale prices can feed into consumer prices. Last week, Eurostat said Ireland’s consumer price inflation rate was running at 9.6% in July, unchanged from the previous month, providing a glimmer of hope that the acceleration of price pressures is nearing a peak.
Eurostat’s harmonised measure of inflation compares with the consumer prices measure, which in Ireland’s case was running at 9.1% in July.