Dublin: Irish households continue to grapple with the rising cost of living, with inflationary pressures showing little sign of easing. Higher energy, fuel and food prices have placed a significant financial burden on families over the past few years, and further increases are expected before the end of the year.
The combined impact of geopolitical tensions in the Middle East, higher energy costs and planned tax measures in the upcoming budget is expected to keep inflationary pressures elevated. Disruptions to shipping through the Strait of Hormuz have also raised concerns over global fuel supplies, increasing the likelihood of higher electricity and gas prices for consumers in the months ahead.
Fuel Prices Continue to Climb
Motorists are already facing sharply higher fuel costs.
Following the escalation of tensions in the Middle East, diesel prices have risen from around €1.70 per litre to more than €2.00 per litre in some areas, while petrol prices are approaching €1.95 per litre.
At the peak of previous price surges, petrol exceeded €2.30 per litre, while diesel also crossed the €2.00 mark.
Temporary excise duty reductions introduced by the government earlier this year have helped cushion the impact. In April, excise duty was reduced by 32 cents per litre on diesel and 27 cents per litre on petrol.
These temporary reductions are due to remain in place until early September, after which the government plans to phase them out gradually by the end of the year. This is expected to result in further increases in pump prices, with fuel costs likely to remain above €2 per litre if global oil prices continue to rise.
Carbon Tax Increase Expected in October
Consumers are also expected to face higher costs when the planned carbon tax increase takes effect as part of the October budget.
The proposed increase is expected to add approximately 2.5 cents per litre to diesel and 2.1 cents per litre to petrol, while also increasing the cost of home heating fuels, including heating oil, natural gas and solid fuels.
The carbon tax increase had originally been scheduled for May but was postponed until October due to already elevated energy prices.
The revised carbon tax is expected to raise the carbon price from €63.50 to €71 per tonne, resulting in:
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Around €17 extra annually on a typical household gas bill.
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Approximately €22 more for every 1,000 litres of home heating oil.
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An increase of about 90 cents on a 40kg bag of coal.
Heating Costs Remain Volatile
Heating oil prices have fluctuated significantly over the past year.
At the beginning of the year, 1,000 litres of heating oil cost less than €1,000, before rising sharply to around €1,800 in April. Prices have since eased to approximately €1,300, but analysts warn that continued instability in the Middle East could drive costs higher again before winter.
Several energy suppliers have already adjusted their tariffs this year, citing increased wholesale costs, and further electricity and gas price increases cannot be ruled out ahead of the colder months.
Food Prices Remain Elevated
Although food inflation has moderated compared with previous years, grocery bills remain considerably higher than before the recent inflationary surge.
Annual food price inflation exceeded 5% in recent years, with significant increases recorded for products such as beef and dairy items, many of which experienced double-digit price rises.
While food inflation has slowed during 2026, with the annual increase standing at 0.6% in June, consumers continue to face higher overall grocery costs than in previous years.
Autumn has traditionally been a period when energy providers review prices. Last September, both Energia and SSE Airtricity increased electricity tariffs by more than 9%, raising concerns that further adjustments could be announced again this year if wholesale energy costs remain high.
Irish Samachar English