Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

The dynamics of energy prices have been key in driving the headline inflation rate over recent years. The initial driver of inflation was a surge in energy prices that followed the Russian invasion of Ukraine. This substantially disrupted the supply of energy, in particular of natural gas, of which Russia was a large exporter to Europe. Wholesale gas prices peaked at £4 per therm in September 2022 having averaged £0.50 per therm prior to the pandemic. The increase in wholesale gas prices subsequently translated into higher retail prices. There was annual energy price inflation of at least 30% in every month from March 2022 to January 2023. In the past few months we appear to have turned a corner with energy prices. Wholesale gas prices for the past three months have averaged roughly £0.70 per therm. In April we witnessed a 6.3% annual decline in consumer energy prices. That speaks to the point I made earlier, that we have not yet seen the full pass through of the wholesale reductions to the retail level. I anticipate we will see further reductions at a retail level. Notwithstanding that some energy companies bought into futures contracts, hedged, and so on, I still anticipate that there will be further reductions at a retail level.

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