Wholesale electricity prices fell 68 per cent last year as energy costs continued to decline from their 2022 peak, Central Stastics Office (CSO) figures show.
The faster-than-expected softening of headline inflation in the Republic and across the euro zone has been driven — almost entirely — by falling energy prices.
The CSO’s latest figures show electricity prices fell by 27.6 per cent in December alone and were 67.8 per cent lower year on year. The agency’s energy products index was down by 22.7 per cent since November 2023 and was down by 60.3 per cent when compared with December 2022.
Energy prices, which had been on an upward surge in the wake of Covid, spiked after Russia invaded Ukraine in February 2022, reaching a peak in August that year.
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Wholesale electricity prices rose by 194.9 per cent between August 2021 and August 2022, with the wholesale price of electricity peaking at almost €400 per MWh (Megawatt Hour), versus an average of about €38 per MWh for all of 2020.
While wholesale prices have fallen sharply in the last 12 months, consumer groups have complained that energy companies are not passing on the lower prices to consumers quickly enough. The CSO’s latest consumer price index shows electricity prices for consumers fell by just 15.2 per cent last year.
Electric Ireland, the State’s largest energy supplier, announced it would cut prices for both its electricity and gas customers earlier this month. The company’s second price reduction in four months will see residential electricity prices fall by 8 per cent and gas prices fall by 7 per cent from the beginning of March.
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The fall-off in headline inflation and energy prices have increased pressure on the European Central Bank (ECB) to reduce interest rates, which have been lifted to a record 4.5 per cent in a bid to quell inflation.
So far ECB policymakers have refused to signal when they might begin a cycle of rate cuts but markets are betting the first one could come in June.
‘’During 2023, wholesale electricity prices continued to trend downwards,” the CSO’s Jillian Delaney said, noting electricity prices were at their lowest point in December since April 2021.
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