Irish Households Face Rising Bills Amid Middle East Conflict, EY Forecasts
Irish households and businesses face higher food and electricity bills due to rising energy prices, as the Middle East conflict impacts supply chains. The EY Economic Eye Spring Forecast predicts economic growth but warns of increased risks and inflationary pressures. Prolonged conflict could lead to a euro zone recession.
Irish households and businesses face increased food and electricity bills due to rising energy prices, according to the EY Economic Eye Spring Forecast published on Tuesday. This surge is attributed to the Middle East conflict, specifically Iran's closure of the Strait of Hormuz, which impacted energy production and supply chains.
The report predicts that while the economy on both sides of the Border will grow this year, uncertainty from the US-Israel-Iran conflict increases risks. EY assumes oil prices will moderate in the second half of 2024 but remain above pre-conflict levels, with more «adverse energy scenarios possible». PrepayPower has already announced electricity and gas price increases, with other suppliers expected to follow.
Loretta O’Sullivan, chief economist at EY Ireland, noted that this «second global energy price shock of the twenty-twenties» is pressuring inflation in Ireland, moderating growth after a strong 2025. The Republic’s economy is projected to grow 1.8% this year, and the North by 0.7%. Prolonged conflict keeping oil and gas prices high could drag activity. EY estimates a 35% chance of recession in the euro zone if oil stays above $100 a barrel, with inflation potentially reaching 2.8% this year.