War in Iran could drive up food prices in Ireland, warns minister

According to price comparison website oilprices.ie, the average cost of a 500‑litre fill of home‑heating oil jumped from €498.56 on February 28 to €832.50 by Sunday morning. File picture: Danny Lawson/PA

Rising costs linked to the escalating conflict in the Middle East could drive up food prices in Ireland, prompting the Government to indicate it is “open” to providing supports if needed.

Junior minister Thomas Byrne warned that the fallout from the war could affect food supplies, though Government sources have since downplayed the possibility of introducing cost‑of‑living measures. They insisted that decisions will not be made “on the hoof” and that it remains unclear what level of intervention, if any, will be required.

Fuel and oil prices have surged in recent days following the US‑Israeli strike on Iran and subsequent retaliatory attacks.

According to price comparison website oilprices.ie, the average cost of a 500‑litre fill of home‑heating oil jumped from €498.56 on February 28 to €832.50 by Sunday morning.

While the Government last week ruled out cost-of-living interventions, Mr Byrne indicated on RTÉ’s The Week in Politics that they could be examined.

“Clearly, prices have gone up. They may well go up dramatically again, and it won't just be fuel and electricity,” he said.

“It could be food supplies. This is an extremely serious and probably unprecedented situation that we're facing.” 

He continued: “I think that the Government [will] look at this over the next week or so, see how things develop.

“I think the Government is open to examining supports that we can give, but there needs to be supports that people will directly benefit from.

“If you cut Vat, for example, that's easy for wholesalers. We don’t want that to happen again because they can pocket that.” 

Government sources on Sunday downplayed reports suggesting that cost-of-living packages and energy supports were being examined.

It follows repeated suggestions last week from Taoiseach Micheál Martin, Tánaiste and finance minister Simon Harris, and public expenditure minister Jack Chambers that energy credits and excise cuts were not being examined, despite increasing prices caused by the war in Iran.

Intervention possible

There was an acknowledgement that if things deteriorate, there may have to be an intervention, but that it is “too early to know what further measures could in theory happen”.

One Government source said while the situation will be assessed, nothing can be decided “on the hoof”.

It is understood that the Government is limited in what it can do due to new requirements to submit fiscal plans to Europe that set out annual spending. The only way member states can deviate from their plans is if the European Commission decides to apply a “break”.

There is also ongoing uncertainty about what economic impacts the war will have on inflation, amid concerns that the conflict will negatively impact more than just fuel.

When inflation rates rose across Europe previously, the European Central Bank (ECB) increased some mortgage interest rates in a bid to bring them down.

With the summer approaching, it is understood the Government is not considering energy credits.

Most people buy their home heating oil between October and April. As companies continue to raise their prices, it is understood that the Government does not want to create a situation whereby people feel they need to spend money topping up their reserves when it is unclear how long the situation will last.

Mr Chambers confirmed last week that the Department of Finance is also conducting analysis on potential economic impacts caused by the conflict. The Irish Examiner understands that this should be completed before the end of March.

While no cost‑of‑living supports are currently under consideration, Government sources said the situation is under constant review, but stressed that any potential measures would need to be targeted.