Grocery prices increased by substantially more than the general rate of inflation over the last year, a price comparison survey by National Consumer Agency (NCA) shows.
Between July 2010 and the start of this month, the cost of an identical basket of goods jumped in price by over 5 per cent in the State's four main grocery retailers, the agency found.
The annual rate of inflation across all sectors currently stands at 2.7 per cent after reaching a 30-month high of 3.2 per cent in April.
The return of grocery price inflation is bad news for consumers as - outside of mortgage repayments - it is the single biggest expenditure for most households.
A similar survey published last August showed that between January 2009 and July 2010, grocery prices had fallen by about14 per cent.
The survey compared prices across a basket of 92 commonly purchased branded products in Dunnes Stores, Tesco, Superquinn and SuperValu. It shows that “price matching” continues to be a feature of the Irish grocery sector, with over a third of products costing exactly the same across the five retailers. There was a price difference of just 3.4 per cent between the cheapest and the most expensive retailer.
Tesco and Dunnes Stores charged €262.37 and €262.41 respectively for the basket, a difference of just 4 cent or 0.02 per cent. In Superquinn, the same items cost €3.44 or 1.3 per cent more than Tesco.
The NCA surveyed two separate SuperValu stores, as it is the only one of the big four retailers which does not operate a policy of national pricing. Results for the two stores differed by just 1 cent and the cheaper basket cost €271.26 or 3.4 per cent more than Tesco.
“Last August, we observed that price matching appeared to be a feature of the Irish grocery market. The latest results suggest that this remains the case,” agency chef executive of Ann Fitzgerald said. “In particular, it is striking that 37 per cent of individual products surveyed had identical prices across all five retailers. Rather than seeing the emergence of a real champion of better value, we observe that grocery retailers in the Irish market remain tightly focused on matching, but not beating, the prices of their competitors."
Special offers continue to remain a feature of the grocery basket. Only in Dunnes Stores was there a notable decrease in the number of special offer items identified during the survey.
“Despite the high level of price matching and consumers preference for every day low prices rather than the hi-lo special offer model it is encouraging to see that shoppers have reacted positively to increasing prices and are playing the existing system, which isn’t set up to their advantage, to get the best value possible,” Ms Fitzgerald said.
While the return of inflation to the grocery market clearly means overall price increases, grocery market data from Kantar reveals a new dynamic amongst grocery shoppers in this country.
The latest Kantar data covering the 12-week period ending June 12th, shows grocery price inflation at 3.9 per cent year on year, while the total increase in the amount consumers are spending is 0.9 per cent.
This indicates shoppers are responding to price increases and have altered their buying behaviour either by buying more items on promotion, switching to own brand or private label equivalents of branded grocery items or by reducing the quantity purchased. This price sensitivity marks a relatively new departure for shoppers who, during the boom years, displayed very little of these value-seeking behaviours.
