Wholesale electricity prices surge as food and building products fall
Wholesale electricity prices have in the past closely followed the prices of European wholesale gas—the fuel used to generate significant amounts of power on the grid.
Wholesale energy prices are rising again, but pressures in the system from a wide range of other items from food to building products are easing rapidly, official figures show.
The price of wholesale electricity in Ireland climbed sharply by 12.5% in October from September, according to the Central Statistics Office, but are still lower than year-earlier levels.
Wholesale electricity prices have in the past closely followed the prices of European wholesale gas—the fuel used to generate significant amounts of power on the grid.
Wholesale gas prices spiked higher at one stage last month but have since fallen back, which may help reassure households and businesses that they do not face any new rise in bills.
There was better news for a basket prices of food at the factory gate, which eased by over 1% last month. They are now 9.3% lower than October 2022, the figures show. Wholesale dairy products have slid 34% from a year ago, while fish and fish products are down 6.2% over the same period.
Economist Jim Power said that the wholesale price figures point to lower retail prices in the shops, if they are passed on. A fall in wholesale prices for many building products suggested the pressures from overstretched global supply chains had eased considerably, Mr Power said.
Overall, "there are still price pressures in the system with electricity, but factory gate price pressures are easing", he said.
Meanwhile, eurozone consumer price inflation probably slowed this month to the weakest since July 2021, reassuring European Central Bank officials who want to see if higher interest rates are working.
Consumer prices rose 2.7% in November from a year earlier, according to the median of 31 forecasts in a Bloomberg survey of economists. Underlying inflation, stripping out volatile elements such as energy, is also expected to have weakened again too.
Those numbers published by Eurostat next week will be the final glimpse before the ECB's meeting on December 14, when officials armed with new projections stretching as far as 2026 will probably keep interest rates on hold for a second straight meeting.
ECB president Christine Lagarde said on Friday that policymakers can now “observe very attentively” as they judge how long to keep borrowing costs high — and decide whether the next move is “up or down.” While they aim to get inflation to 2%, the measure they watch most closely is the so-called core gauge.
