The AA has warned that prices for petrol and diesel are spiking this month, as the VAT rate changes back to 23 per cent, from its discounted 21 per cent, and global costs for crude oil rise.
Four months of fuel price rises
It's the fourth straight month of fuel price rises in Ireland, and according to the AA's figures, the average cost of a litre of petrol has increased by over 5c to a current rate of 138.9 on average - up from 133.8 last month. Meanwhile, diesel prices within the past month have increased at a similar rate climbing to a current average price of 129.8c per litre - up from 124.9c last month. At the time of the AA's analysis, crude oil costs had risen to approximately $67 per barrel, up from $64 in mid-February.
Financial impact on families
"The decision to end the reduction in VAT at the beginning of March had been known in advance, but given that many families across the country are still dealing with the financial impact of COVID-19 a continuation of the lower rate, for at least as long as Level 5 restrictions remain in place, may have made more sense," Conor Faughnan, AA's Director of Consumer Affairs stated. "Often when we discuss fuel prices, most of the attention is on crude oil costs or international factors such as OPEC reductions in production. However, the reality is that these factors only affect about one-third of prices at the pump, with our own tax system playing a much larger role in what we pay for fuel."
Still cheaper than in Jan 2020
Although the latest price rises mean that fuel is now at its most expensive since the onset of the COVID lockdowns, it is still a little cheaper than it was at the start of 2020 - in January 2020, the AA's monthly fuel study found that a litre of petrol cost 144.5c per litre on average, with diesel costing 135.9c per litre.