Rising energy prices have placed a significantly heavier burden on low-income households, with government supports only partially offsetting the impact, according to a new report from the Economic and Social Research Institute (ESRI).
The study found that households on lower incomes spend a far greater share of their earnings on energy-related costs, including home heating oil, petrol, and diesel. As a result, increases in fuel and heating prices have had a disproportionately severe effect on the most financially vulnerable groups.
In response to the cost pressures, the Government introduced a range of measures in March and April, including temporary reductions in fuel excise duties, suspension of the National Oil Reserve Agency levy, extension of the fuel allowance, and a deferral of a planned increase in the carbon tax. The ESRI estimated that these interventions reduced the immediate impact of energy price increases by about half.
However, the report cautioned that these measures did not eliminate the underlying imbalance in how energy inflation affects different income groups. The ESRI described the effect as “regressive,” meaning that lower-income households continue to bear a greater relative burden.
Dr Claire Keane, associate research professor at the ESRI, said that while the policy response helped cushion the shock of rising prices, its broad-based design meant that a substantial portion of the support also benefited higher-income households. She noted that more targeted assistance would likely provide stronger protection for vulnerable groups while reducing overall public cost.
According to the analysis, without government intervention, lower-income households would have seen energy price increases equivalent to around 3% of their disposable income. In contrast, higher-income households would have experienced an impact closer to 1%.
Dr Keane explained that overall energy price rises alone have increased household spending by roughly 2% of take-home income, although the effect varies significantly across income brackets.
She also suggested that policy design should take greater account of income differences, particularly ahead of winter months when price volatility tends to increase. Short-term targeted measures, she said, could help shield households most at risk.
Looking further ahead, the report highlighted the importance of reducing reliance on fossil fuels, noting that energy markets remain highly volatile. Because lower-income households allocate a larger share of their income to energy, they are more exposed to price fluctuations.
The ESRI concluded that recent cost-of-living packages have been more broadly distributed across income groups than previous supports, but warned that this approach may be less effective in addressing inequality during periods of sustained energy instability.
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