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Explainer: Why families will pay €300 extra for fuel to warm their homes in winter

Householders face paying an extra €300 this winter for oil to fuel their heating systems.

A surge in the cost of home heating oil and the price of petrol and diesel have pushed up the inflation rate to its highest level in more than a year.

The cost of filling an oil tank has gone up by almost a third in the past year, according to the latest consumer price index figures from the Central Statistics Office (CSO).

Despite a small fall in the cost of heating oil in July, over the past year the price is up by 29.3pc.

This means it will now cost around €160 more for a fill of 1,000 litres of oil for the winter than it did this time last year.

Families will have to shell out up to €750, compared with around €550 last year.

The cost of 1,000 litres is between €690 and €750 at the moment, according to price comparison site Cheapestoil.ie.

Rises in the cost of a barrel of oil on international markets are sending up the cost of domestic fuels.

Most homes will require at least two oil fills during the winter months, which means they will have to pay up to €300 more.

Almost two-thirds of rural homes and more than a quarter of urban households use oil to fuel their central heating and water boilers, according to Census figures.

Taxes

Michael Toner of Cheapestoil.ie said heating oil was four times dearer than in Northern Ireland due to higher taxes and levies, including carbon tax.

“August is surprisingly one of our busiest months where consumers are actively encouraged to order early, and we would also recommend heating oil users to order now when distributors are less busy and for the best service,” he said.

The surge in the cost of home heating oil comes after six energy firms hiked their prices this month, raising the price of electricity and gas by up to €200 for some householders who use both fuels.

It was also revealed this week that electricity and gas prices in this country are among the most expensive in Europe.

Petrol prices are up 11pc in the past year and diesel prices were up 14pc.

Air fares have also risen with strikes at Ryanair potentially linked to this trend. Members of the travel industry this week claimed prices at rival airlines had taken off.

The cost of airfares was up a huge 32pc in the month of July, although the cost is down 9pc on a year ago.

Costs at restaurants and cafés were up 2pc on the year, something which will be closely watched as the Government considers scrapping the special 9pc VAT rate for the sector.

Rents were up 6pc in the past year, with pressure to find reasonably priced accommodation contributing to the rent crisis.

Motor insurance prices are down 6.7pc on the year, but this comes after years of steep rises.

Overall, prices were up 0.8pc in July compared with the same month last year, according to the CSO, the highest inflation rate since April last year.

Alan McQuaid, economist with Merrion Stockbrokers, said that despite strong economic growth, there was little sign of sustained pressure on prices.

“This appears to be the same story across the eurozone, suggesting that the European Central Bank will be in no hurry to increase interest rates,” he said.

He said the direction of oil prices would be critical in determining the headline inflation rate over the next year.

Article Source: http://tinyurl.com/kbwqb42


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