After a turbulent 2022, will 2023 be any kinder to consumers?
2022 was a tough year for consumers with record inflation, interest rate hikes, and an energy crisis to contend with.
From energy and banking to broadband and insurance, we look at whether 2023 will be any kinder.
Gas and electricity
Wholesale gas and electricity prices began to fall towards the end of 2022. However they still remain at hugely elevated levels. And unfortunately we’re unlikely to see any energy price falls in the short term at least.
The average price of electricity on the wholesale market in Ireland over the first 11 months of 2022 was still around 63% above the average price for 2021 for example.
Meanwhile on the UK gas market, from where we import about 75% of our gas, the price of gas is trading at close to 200 pence per therm - still well above the 50 to 55 pence level it traded at around 18 months ago.
Also, consumers need to remember that the price households pay for their gas and electricity is usually an average price of the cost of energy on wholesale markets over the course of around a year or two as suppliers buy most of their energy months in advance through hedging. This is to try ensure households aren’t faced with extreme swings in the price of their energy on a weekly or monthly basis.
In 2022 wholesale gas prices were up by over 1,000% at one stage during the summer while electricity prices were up by over 400% at one stage in spring. But thanks to hedging an increase of this size wasn’t passed on to households.
Buying in advance also means suppliers can be sure they have enough energy to meet their customers' demands.
However a downside of hedging is that falls in the price of energy aren’t immediately passed on either.
Due to hedging, we’ll need to see a sustained reduction in the price of energy on wholesale markets for several months before we can talk of smaller bills for consumers. But hopefully 2023 will see no further gas or electricity price hikes and the outlook is better than it was only a few weeks ago.
In the meantime, if you're looking to save on your energy bills, check out these 16 ways to use less electricity.
Petrol and diesel
In 2022 petrol and diesel reached a record high of over €2 a litre, which forced the Government to temporarily reduce excise duty.
Prices rose for several reasons.
Oil rose to over $120 a barrel following the outbreak of war in Ukraine and sanctions on Russia. Oil is also priced in dollars on international markets and the euro plunged in value against the dollar, falling below parity at one stage, making a barrel even more expensive for Europeans. On top of this, supply chain bottlenecks and disruption to oil refineries led to a reduction in the supply of diesel in particular. This led to diesel becoming more expensive than petrol.
Since then, oil has fallen back to under $90 a barrel, while the euro has risen above parity against the dollar. And supply chain disruptions have eased somewhat. So it's likely petrol and diesel prices will remain well below the record highs seen last year. However the Government will likely come under pressure from the Green Party to reverse the excise rate cut (20 cent a litre on petrol and 15 cent on diesel) over the coming months. Which, if implemented, would see prices creep back closer to €2 a litre again.
Mortgages
2023 doesn’t look like a great year for mortgage customers.
Since last July the European Central Bank (ECB) has hiked its rates from 0% to 2.50% to try tackle rampant inflation. And it’s likely the ECB will hike rates to over 3% over the coming months.
This will mean higher mortgage repayments for those on trackers and variable rates. While first-time buyers hoping to get on the property ladder will face higher rates too.
The main Irish banks have already started to respond to the ECB rate hikes with AIB upping it fixed rates by 1 percentage point over the past few months while PTSB recently hiked some of it fixed rates by up to 0.90 percentage points. Tracker customers have seen their rates go up by the full 2.50 percentage points.
Early in 2022 it was possible to get a mortgage rate as low as 1.90% (albeit with several caveats). By the end of 2023 the lowest rate on offer will likely be 4% or more.
If you're a mortgage customer who's on a variable rate or who is coming to the end of your initial fixed-rate agreement, check with your current lender to see what options are available to you. It may be possible for you to lock into a lower fixed rate with your existing lender. Or you can look to see if you can save by switching lender.
If you're on a variable rate or a tracker, check out this article on whether you should switch to a fixed rate.
Banking
2023 will be a year of big change.
KBC and Ulster Bank both plan to fully exit the Irish market. Hundreds of thousands of current account and savings customers who have yet to move to a new bank will have to take the plunge. Meanwhile Revolut, An Post and the Credit Unions will continue to improve their services and offerings in an attempt to poach customers from the remaining Irish retail banks. Both Revolut and An Post have made clear their intentions to enter the mortgage market for example but that's unlikely to happen this year.
However, savings customers are likely to see a slightly better return on their money as the hike in ECB interest rates will lead to slightly better deposit rates for savers.
If you're a customer of either KBC or Ulster Bank who's yet to make the move, check out our in-depth article on the current account options available to you.
Broadband, mobile and TV
Broadband, mobile and TV services will all become more expensive this year.
In 2021 and 2022 many telecommunications providers started announcing inflation-busting 'annual price adjustments'.
Vodafone has started increasing its plans by the annual rate of inflation (as measured by the CPI) PLUS 3% every single year, with the hikes coming into effect in April of each year. Eir has started doing the exact same.
With the average rate of inflation for 2022 likely to come in around 7%, Eir and Vodafone customers will all see their bills go up by around 10% in a few months' time.
Streaming services
Long gone are the days when Netflix was the only streaming service in town. There's now a host of streaming services entertaining Irish audiences with shows and movies to suit all tastes.
One thing they all have in common though is that they're all getting more expensive.
Apple just hiked its service from €4.99 to €6.99 a month. Amazon hiked its service by £1 a month a few weeks ago. And it's likely Disney will increase its prices again around the middle of the year.
Netflix customers are likely to be spared this year, however, after the company got big pushback for increasing its prices yet again last year.
You can check out our guide on all the main streaming services in Ireland here.
Home insurance
Home insurance premiums will likely rise this year (as they did in 2022) due to rapidly rising construction costs. However you can still potentially save money by shopping around and getting a new customer, introductory discount with a different insurer.
At renewal it’s also important to ensure you have an updated value for the rebuilding of your home to ensure you’re not underinsured. Under insurance is becoming a big problem in the home insurance sector and could leave you with a nasty bill to pay in the event of you having to make a claim.
If you're looking for better value home insurance, you can get a discounted quote on bonkers.ie in minutes.
Car insurance
Amidst all the increasing prices there is some good news for consumers!
Car insurance premiums fell by around 10% in 2022 as reforms aimed at tackling excessive personal injury payouts seem to be working. And they're likely to fall slightly further this year.
However it’s important that you still shop around. Even if you get a cheaper quote upon renewal with your existing insurer you might be able to save even more by switching to a different insurer.
Insurers, just like every business, usually reserve their best deals for brand new customers and this is where most of the recent reductions in price will have taken place. Don’t just presume that by staying with the same insurer you’re going to see an automatic reduction of 10% or so in your premium.
If you're looking for better value car insurance, you can get a discounted quote on bonkers.ie in minutes.
