From September, struggling households will be forced to spend an extra €400 a month on essentials
FAMILIES on average household incomes will fork out up to €400 extra every month on basic essentials from next month compared to last September.
Along with the continually spiralling cost of energy and fuel, expected further rises in interest rates will add a significant chunk to monthly repayments for those on tracker mortgages.
An Irish Mail on Sunday analysis of rising fuel, energy, mortgage and food prices shows that a typical family of four can soon expect to spend at least an extra €347 per month on those four items alone, compared to 2021.
And families with school-age children who are already struggling to meet their monthly bills will soon face another huge payout of well over €1,000 per child as schools reopen next month.
The increase in basic monthly outgoings was described as ‘shocking’ by the policy and council adviser of the Consumers’ Association of Ireland (CAI), Dermott Jewell.
He said the findings show State supports for the cost-of-living crisis ‘have already been completely eroded’, and urged the Government to include targeted payments in next month’s budget.
Mr Jewell told the MoS: ‘An additional, single payment, certainly for some of those groups worst affected, would be beyond appreciated. It would potentially be something that would keep them away from the door of financial instability, of debt.’
He warned that the extra costs analysed by the MoS, which ‘only cover the basics’, will leave businesses ‘struggling to some degree, no question’.
Mr Jewell said: ‘A figure of between €4,000 and €5,000 a year is a frightening amount of money posttax, or from a State pension, or for anybody to try and find. People have had to cut back on buying something, so it’s going to impact back across the market.’
A 1% interest rate hike alone will add an extra €91 to the monthly repayments on a 20-year tracker mortgage of €200,000 (based on someone paying a margin of 1% on the ECB rate).
Daragh Cassidy of price comparison site Bonkers.ie told the MoS he expects to see this increase by the end of the year, in addition to the 0.5% rate hike that has already been implemented – the first since 2011.
The spiralling cost of petrol and diesel means the average driver is spending around €180 a month to fuel their car, according to a recent survey by iReach for insurer Aviva.
In rural areas this cost is much higher, but even the €180 figure means a jump of around €58 more per month than last year, or €116 for a household running two cars.
The average household electricity bill is now around €49 per month more than this time last year, and the average gas bill is €48 more, according to averages across six suppliers.
However, Mr Cassidy said it is ‘likely all suppliers will increase prices more over the coming weeks’.
He said it was ‘almost impossible to forecast’ the exact amount, but that ‘an increase of well over 10% is almost certain’.
This would add around €5 to each of the figures above.
A family that spent €500 a month on groceries this time last year is now spending €34 more, according to the latest Central Statistics Office figures, although that is also predicted to continue to increase.
On top of these, the predicted 1% hike in interest rates and 10% in electricity and gas would add an extra €347 per month to mortgage, fuel, energy and food compared to a year ago.
Families also face increased back-toschool costs over the coming weeks. A recent survey by iReach Insights for the Irish League of Credit Unions found it costs on average €1,518 to send a child back to secondary school, and €1,195 for a primary school child. A family with one of each will pay around €2,713 in total – up €36 on last year, according to the survey.
Families who send their children to school by bus will save thanks to the Government’s recent suspension of school bus fees for this school year – which were €350 for a child, with a maximum of €500 per family. Another extra cost in the colder winter months will be higher energy bills. Money Guide Ireland says winter energy bills are around 36% more than in summertime – around €51 more in winter for an average annual bill of €2,015.
Less basic items such as mobile phone bills and TV and broadband subscriptions are also set to increase. Eir is adding an extra €5 a month for all plans as of the start of August, and will increase again every April according to the annual inflation rate plus 3%. Other providers are expected to follow suit, while streaming sites have also increased their fees by a few euros in recent months.