Government urged to review €505m household subsidies as Ukraine crisis worsens inflation

Advocates for low-income households have urged the government to review the €505million energy subsidy package it unveiled two weeks ago in light of soaring fuel prices sparked by the Ukraine crisis.

  • An increase to €200 in the household energy credit;
  • A fixed fuel allowance of €125;
  • A 20% reduction in transport prices from the end of April;
  • A cap on school transport costs.

However, Paul Joyce, senior policy adviser at the Free Legal Advice Centers (Flac), said continued reviews of household bills would be needed due to the impact of the Ukraine crisis on fuel prices.

“It’s a pretty deplorable situation,” if the €505m package is meant to remain unchanged until the October budget, Mr Joyce said.

He also called for the creation of an Nphet-like agency for the government to monitor price increases in all areas.

Tricia Keilthy said SVP supports increasing fuel allowances and discretionary funds to target the most vulnerable households who need the most support.

St Vincent de Paul’s social policy development officer, Tricia Keilthy, said it was more urgent than ever that resources be targeted at low-income households following the rise in prices.

The charity is promoting the expansion of fuel allowances and discretionary funds to target the most vulnerable households, who need the measures the most.

The price of wholesale gas has risen by 10% since the government announced its improved package on February 10, according to Irish Examiner calculations. And the price of crude oil, which yesterday traded at $98.30 a barrel, rose 7.5% over the same period.

Russia is a major exporter of oil and gas and, together with Ukraine, supplies large quantities of wheat to world markets. The price of many commodities rose yesterday, with wheat up 1.75%, lumber up 2.4% and coffee prices up 1.7%.

The Central Bank said rural, low-income and elderly households were experiencing larger increases in the cost of living due to rising inflation, mainly due to rising energy costs.

KBC Bank Ireland's chief economist, Austin Hughes, said consumer confidence had 'distorted' due to the rising cost of living as 'emerging fears around the conflict in Ukraine have more that offset the alleviation of Covid concerns'.  Photo: Iain White Photography
KBC Bank Ireland’s chief economist, Austin Hughes, said consumer confidence had ‘distorted’ due to the rising cost of living as ’emerging fears around the conflict in Ukraine have more that offset the alleviation of Covid concerns’. Photo: Iain White Photography

Low-income households have to spend more of their income on energy and food, and less on goods and services. While headline inflation was 5.7% for the average household in December, it was 6.2% for rural households, the Central Bank said.

Meanwhile, consumer confidence has eroded this month due to soaring prices and worries about the impact on energy costs of the escalating Russia-Ukraine crisis, according to a report. KBC Bank survey.

The fall in consumer confidence in February may not give the expected boost to consumer spending, but still contribute to house price inflation, KBC said.

More than a quarter of consumers said they had already spent their savings, while 17% clung to an emergency in case of bad weather, according to the survey.

“Irish consumer confidence weakened on rising concerns about the cost of living in general and the cost of housing in particular, while emerging fears over the conflict in Ukraine more than offset the easing of Covid-related concerns. “said Austin Hughes, chief economist of KBC Bank.

However, he noted that despite growing caution, Irish consumers remain increasingly optimistic about employment prospects.

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