Grocers and wholesalers have published a survey which they say shows they are not engaged in profiteering despite huge increases in food prices in the past three years.
With a banner declaring "high costs = high prices" at their feet, grocer, wholesaler and food supplier representatives said their findings "nailed" the myth that vast profits have been reaped at the expense of consumers.
Wage inflation, higher insurance and currency fluctuations are chiefly to blame for a 13.6 per cent increase in food and drink prices between 2000 and 2002, they said.
Retailer overheads climbed by 30 per cent in the same period, while the average inflation rate outstripped that of the food sector at 15.9 per cent, said the author of the report, economist Mr Paul Tansey.
As a result, grocer margins have slipped from 2.93 per cent in 2000 to 2.65 per cent in 2002 and wholesaler margins have risen by only a point to 1.7 per cent, the research found.
The study was sponsored by independent grocer lobby group RGDATA; Food and Drink Industry Ireland, which represents food suppliers; and IADT, the grocery wholesalers organisation.
Its findings demolish the myth that the industry is accumulating unjustifiable profits through overcharging, said RGDATA director general Ms Ailish Forde. "This illustrates the margins... are very low," she said.
If anything, the food sector has absorbed climbing costs rather than passing them to consumers, said Mr Ciaran Fitzgerald, director of Food and Drink Industry Ireland, part of the IBEC lobby group.
"The food and drink industry has absorbed very substantial costs, which it has not passed to the consumer. The real issue going forward... is how we can reduce the cost of business in Ireland. That is the key to reining in prices," he said.
With 56 per cent of food imports originating in the UK, the strength of sterling against the euro over the past three years is another significant contributor to food price inflation, said the report.
But its conclusions drew the scorn of the consumers' lobby, which dismissed it as a "cynical" attempt to justify high prices.
"The claim that huge profits are not being reaped will ring very hollow for the public, who see convenience stores opening at every street corner. It is obvious that this is a thriving business, with a lot of money to be made," said Mr Michael Kilcoyne, president of the Consumer's Association.
The research, which analysed the financial results of the Republic's three major independent wholesalers - Musgrave, BWG and Stonehouse - and 50 independent grocers, did not investigate the multiple sector, which accounts for approximately 55 per cent of retail sales. The multiples were not asked to participate because it was believed they would not wish to, said Mr Tansey.
