Irish consumers will be paying more for fuel, hospitality, and haircuts from today as the Government reverses cuts on VAT and excise duty.
The reduced 9 per cent VAT rate returned to 13.5 per cent at midnight, pushing petrol and diesel prices up from today.
The increases in fuel excise duty will add 7c to a litre of petrol and 5c to diesel from 1 September, meaning it could cost €3.85 more to fill a 55-litre family car with petrol, and €2.75 more to fill a diesel car.
The average price in Ireland on Friday sat at around €1.70 for petrol, and €1.66 for diesel, but drivers are set to pay a few extra euros when filling up their tanks as previous cuts by the Government, introduced to help with the cost of living, are reversed.
Motorists will have to contend with one further increase in fuel excise duty planned for October. The phased restoration of the full rate of excise duty on 31 October will further drive up the cost of a litre of petrol by 8c, while a litre of diesel will be 6c more expensive.
In addition, there will be a €7.50 increase in the Carbon tax announced in the October Budget, which will increase the price of petrol and diesel by around 2 cent.
Other sectors are also expected to increase prices – with everything from a cup of coffee, to a meal out, a hotel room, or a haircut, set to be more expensive, even as the general rate of inflation falls.
An analysis from comparison and switching website bonkers.ie showed that petrol, diesel, streaming services such as Netflix and Disney+, alcohol, and transport services are all set to go up in price over the coming weeks, inflicting further financial pressure on households across the country.
Gas and electricity prices are expected to remain close to record highs, with only a small fall in prices expected in the foreseeable future.
The cost of groceries is still a pressing concern for families, with recent statistics from the Central Statistics Office (CSO) showing that food inflation is still sitting at over 10 per cent a year – with the cost of food having rose 13.1 per cent in the year to April 2023.
The hospitality sector will also be impacted – with the reduced 9 per cent VAT rate for the sector returning to normal from 31 August. This means that the cost of things like coffee, cinema tickets, a hotel room or a meal could all look set to rise if businesses decide to pass on the VAT increase to customers.
Alcohol prices will also look to see an uptick – after Diageo announced another four per cent increase in the price of a pint, as well as increases in the cost of brands including Carlsberg, following a 12 per cent increase at the start of the year.
While inflation is expected to fall over the coming months, prices are not guaranteed to fall for Irish consumers grappling with the cost of living crisis.
While the overall rate of inflation fell to 6.1 per cent in June – from 6.6 per cent in May – according to the Central Statistics Office, prices still jumped by 0.8 per cent in the course of a month.