Recent energy inflation has increased the cost of estimated households’ consumption by over €21 per week on average.
A new report has found that recent energy inflation has increased the estimated share of households in energy poverty to nearly 30%.
The research comes from the Economic and Social Research Institute (ESRI), with the institute defining energy poverty as households that spend more than a tenth of their net income on energy.
This includes electricity, but excludes motor fuel.
Based on energy inflation observed from January 2021 to April 2022, it is estimated that 29% of households are in energy poverty, a figure above the previously recorded high of 23% in 1994/95.
The report also states that energy inflation during this period increased the cost of estimated households’ consumption by €21.27 per week, on average.
This figure rises to €38.63 per week when motor fuels are included.
Another key finding of the report is that cutting indirect taxes on energy, such as VAT, fuel duty or carbon tax is a “poorly targeted response” if the objective is to protect those most affected by rising energy prices.
“About half of the aggregate gain from such tax cuts… goes to the highest-income 40% of households compared to less than a third to the lowest-income 40% (who have been more adversely affected by rising energy prices),” the ESRI said.
“Instead, increases to welfare payments, the fuel allowance, and even lump-sum payments like the household electricity credit are better targeted at those most affected by energy inflation.”
One of the authors of the report, Niall Farrell, said that rising energy prices are having a substantial impact on households, many of which were already experiencing energy poverty or deprivation.
“Our research finds that, on average, these changes are more burdensome for lower-income households, rural households and those at risk of poverty,” he added.
“This is because energy expenditures tend to comprise a larger share of income for these households.”
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