Mortgages, energy and fuel prices: What’s coming for consumers in 2024
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Consumers won’t look back on 2023 with much affection. We had to deal with high inflation, several interest rate hikes, rising health insurance costs and an ongoing energy crisis.
Is 2024 going to be any better?
Daragh Cassidy of independent price comparison and switching site Bonkers.ie says while there will be some good news for consumers in 2024, don’t get your hopes too high.
On the energy front, the arrival of a new supplier, Yuno Energy, at the end of last year helped spark some competition in the sector. In the October budget, the Government agreed to keep the reduced 9% rate of Vat on energy bills for another year, as well as announcing a new €450 electricity credit.
The main energy suppliers announced a series of price reductions in the latter half of last year. These should continue into the second half of the year.
“This means that by the end of 2024, we should see energy prices around 30% to 35% below where they were at the start of 2023" Mr Cassidy said.
However, this would still leave prices about 50% above where they were in early 2020, before covid and then the war in Ukraine wreaked havoc with energy prices. And prices may never return to these levels, unfortunately.”
While last year saw some good news for energy consumers, those with mortgages did not fare quite so well. In early 2021 it was possible to get a mortgage rate as low as 1.90% in Ireland, albeit with several caveats. The current lowest rate is 3.65% — a green rate — while the average, according to the Central Bank, is 4.27%.
"The markets seem convinced that the ECB will have to start cutting rates as soon as March or April due to plummeting inflation and a flagging eurozone economy. However, it may be a bit later than this.”
Then there’s petrol and diesel. From a year high of about €1.85 a litre in September, petrol and diesel prices have eased slightly in recent weeks due to a fall in the price of oil and a slightly weaker dollar — oil is largely bought and sold in dollars on international markets.
This means fuel prices have ended the year close to where they started, at around €1.75 a litre.
However, from next April, excise duty is due to increase by 8 cent a litre on petrol and by 6 cent a litre on diesel as a result of the final reversal of excise duty cuts that were introduced by the Government in March 2022 at the height of the energy crisis.
And in October another increase in the carbon tax will see just under 3 cent added to a litre of petrol and diesel.”
It’s also likely oil will increase at least slightly in price next year as Opec looks to support prices by cutting output, while the euro is unlikely to strengthen much further against the dollar. All told, it means prices could start nearing €2 a litre at the pump again as we head into the second half of next year.
On the communications front, Mr Cassidy expects broadband, mobile and TV services will all become more expensive next year.
Every year, Vodafone increases the price of its plans by inflation plus 3%. Where does this 3% come from? It’s based on "ongoing investments we make in our… networks, products and services".
You have to wonder what they’re doing with the rest of the money we pay them.
In any case, Eir has also started doing the same thing. With the rate of inflation for 2023 likely to come in at about 6%, Eir and Vodafone customers will see their bills jump by close to 10% in April, when the rise takes effect.
How do you beat these price rises? Switch providers. Mr Cassidy points out there are lots of good deals on offer at the moment.
“Some streaming services are likely to increase in price yet again as these services continue to spend a fortune on producing more and more content for insatiable viewers. Our money is on Disney+, Apple TV+ and Paramount+ upping their prices towards the end of next year.”
A recent report from the Central Bank showed the cost of motor insurance fell by 7% in 2022 versus 2021, as reforms aimed at tackling excessive personal injury payouts seem to be working.
The average motor insurance premium in 2022 was €568. It fell to €555 in the final quarter of that year. In 2023, premiums held reasonably steady, up by just 1.8%, according to the CSO.
“Looking forward to next year, it's likely premiums will stay reasonably steady as falling inflation and the aforementioned insurance reforms keep premiums in check," Mr Cassidy said.
While motor insurance has taken a breather in its upward climb, the same can’t be said for health insurance. Last year saw the three health insurers (VHI, Irish Life, and Laya — now Axa) announce several price hikes.
“And 2024 will start off on a bum note for Irish Life customers as the insurer increases its prices by 4.8% from January. This comes on the back of two other recent hikes from Irish Life which will leave some of its plans 20% more expensive for those renewing.”
Insurers blame the recent premium hikes on a big increase in the number of claims and those seeking care in private hospitals. And it's likely 2024 will see yet more premium hikes as medical inflation and the cost of delivering healthcare get ever higher.
It's fair to say household finances have taken a bit of a battering over the past two years,” said Mr Cassidy.
Tolls have gone up. Broadband, TV and streaming service prices have risen. Even after the energy price cuts we saw in October and November, gas and electricity prices are still around double normal levels.
All told, the average household is around €3,500 a year worse off. And that’s before you even take mortgage rate hikes into account…
It’s not all gloom and doom, however. Daragh Cassidy believes the worst of the cost-of-living crisis is behind us and this year we should see inflation continue to ease while falling gas and electricity prices and falling interest rates should ease the burden on many consumers.
“A big increase in the minimum wage to €12.70 an hour from January will also help the lower paid. However, food costs are unlikely to fall by much, if at all.
And this year there's unlikely to be another round of energy credits in the budget… but barring another economic shock of some sort, things for consumers look a bit better and the overall outlook for the economy looks relatively benign.”