Consumers have been hit by repeated price shocks across the board over the past few years; punctuated by multiple energy price hikes, the rising cost of food, and more recently a spike in fuel prices.
And with the increases showing no sign of relenting, before the year is out they could be paying even more at fuel pumps, on energy bills, and at supermarket check-outs.
€2 per litre for diesel/petrol by the end of 2026?
Just before the US began its strikes on Iran at the end of February, a barrel of brent crude oil (the industry benchmark) was costing around $73.
But two months of sustained conflict in the Middle East saw oil spike to $114 a barrel in May, before falling back below $72 at the start of this month – while now it’s hovering near the $85 a barrel mark.
Here, this has translated into fuel-pump prices for diesel jumping from c. €1.70 a litre to more than €2 – with petrol up from a similar level to around €1.95 a litre.
At the height of the price jump, diesel was costing above €2.30 a litre on many forecourts with petrol above €2 a litre.
Motorists though are not currently paying those elevated costs, due to temporary excise cuts that are insulating them somewhat … for now.
Back in April, in response to the surging oil prices, the Government lowered the excise duty by €0.32 on a litre of diesel and €0.27 on a litre of petrol.
The plan at present is for those reductions to stay in place until the start of September, before being unwound in four phases by the end of the year.
This would put both diesel and petrol costs on course to go back above €2 per litre on forecourts – and possibly even higher given the impact the ongoing nature of the conflict in the Middle East is having on oil prices.
Add to that another carbon tax hike (c. 2.5 cent on a litre of diesel and 2.1 cent on petrol) that is due to take effect as part of October’s budget.
Home-heating fuels to cost more from October
Carbon tax on other fuels (including home-heating oil, gas, and solid fuels) was due to be increased in May but, given the severe energy-cost inflation at the time, it was deferred until October.
Once it eventually kicks in, the rise (by €7.50 to €71 per tonne of CO2 emitted) will add roughly €17 to the average household’s gas bill, €22 to a 1,000-litre fill of home-heating oil, and 90c to a 40kg bag of coal.
The increase for home-heating oil in particular may be tough to absorb.
At the end of February the cost of 1,000 litres of home-heating oil was below €1,000, but by April it had nearly doubled to c. €1,800.
That price has since come back somewhat to c. €1,300 but could easily spike again due to volatility caused by the Iran war.
Food-price inflation to the fore once again
Some of the higher fuel costs outlined above have already begun to be baked in across the economy, and therefore supply chains.
As this continues to happen, it is likely that producers and suppliers will either be unable or unwilling to absorb any cost increases on their side and will pass this on to consumers in the form of price rises.
We saw something similar in the aftermath of Russia’s invasion of Ukraine in 2022, which triggered a global spike in energy costs.
This had led to general annual food-price inflation of more than 5% in recent years, but some foods went up much more in price.
For example, the cost of beef jumped by around a quarter last year, with dairy products also seeing double-digit increases.
Food-price rises have moderated since the start of 2026, with the annual increase coming in at just 0.6% in June.
However, as winter sets in – or even before – the latest round of energy price hikes could have fed into prices in supermarkets.
Energy bills likely to continue to rise
In recent years the autumn has become the traditional time for energy price hikes.
By way of example, last September both Energia and SSE Airtricity increased what they were charging for electricity by more than 9%, with the higher costs kicking in the following month.
With the squeeze on fossil-fuel availability off the back of the limited transit of containers through the Strait of Hormuz, it is expected there will be a knock-on effect on household electricity and gas prices.
Some providers moved on price already this year – blaming the higher cost of doing business – but it would be no surprise to see more increases ahead of the winter.
Thankfully there is strong competition among energy providers, so shopping around if you’re out of contract can offset some of these price rises.
