Electricity costs for Irish hospitality operators rose 61.7% between July 2023 and July 2026, against a 7.5% increase in the headline consumer price index over the same period, according to a new report by Dublin City University economist Anthony Foley commissioned by the Drinks Industry Group of Ireland (DIGI).

The report, published this month, found that electricity, labour, insurance and wholesale beer all outpaced headline CPI by double-digit margins. Insurance costs climbed 26.6%, labour 15%, and wholesale beer prices 12% across the three-year window. Overall energy costs rose 48.8%.

What does the report say about sector exposure?

Foley characterised the sector as highly labour intensive, dominated by small enterprises and operating on thin margins. That combination, he said, leaves pubs, restaurants and hotels with little capacity to absorb cost shocks such as the energy spikes recorded after Russia's invasion of Ukraine and the ongoing Middle East conflict.

"The hospitality sector is predominantly made up of small businesses, operates on very slim margins and is extremely labour intensive, which leaves it with very little cushion to absorb sudden financial shocks," Professor Anthony Foley said. "As such, pub, restaurant and hotel owners find themselves exceptionally vulnerable to any increase in the cost of labour or inputs."

Why is the report being released now?

DIGI commissioned the study weeks after separate research documented 2,205 Irish pub closures over the past 20 years, a reduction of more than one quarter in the licensed trade. The Drinks Industry Group is pressing the Irish government to cut excise duty on alcohol by 10% in the upcoming Budget, arguing ministers hold direct control over that line item even if broader cost drivers remain outside fiscal reach.

Donall O'Keeffe, DIGI secretary, said: "While the government cannot control every cost pressure our venues face, it has direct control over the taxes it levies on pubs. If ministers want to prevent thousands more local pubs from shutting their doors over the next decade, they must take immediate action and deliver a 10% cut to excise duty in the upcoming Budget."

What costs are moving fastest?

• Electricity: +61.7%
• Insurance: +26.6%
• Labour: +15%
• Wholesale beer: +12%
• Overall energy: +48.8%
• Headline CPI: +7.5%

Insurance stood out as a category where cost relief had been expected. Despite reforms in the sector, premiums still rose by more than a quarter between mid-2023 and mid-2026. The four-digit gap between electricity inflation and CPI underscores the exposure of energy-heavy venues such as hotels, full-service restaurants and brewpubs to grid prices that have yet to normalise fully.

How does this affect European operators?

The Irish data adds to a broader European pattern of hospitality input inflation outpacing consumer prices. For hotel and pub groups operating multi-jurisdiction portfolios, the report underlines the need to model energy contracts and insurance renewals against multi-year inflation scenarios. For Irish operators specifically, the central lever in the near term remains the Budget process and any movement on excise.

What happens next?

The Irish Budget is expected in early October 2026. DIGI will lobby ministers directly ahead of the fiscal announcement. Operators should expect clarity on excise rates within weeks, with any 10% reduction flowing into wholesale and on-trade pricing structures before the end of the year. Insurance renewal cycles through Q4 2026 will provide the next test of whether the reform-driven easing Foley flagged has reached commercial premiums. Watch for DIGI's pre-Budget submissions and the Department of Finance's excise schedule in early October.