Retailers have been urged to do more to reduce their prices as a new study reveals that higher operating costs in Dublin alone do not explain the price disparity with shops in the north.
The study, which was commissioned by Forfás on behalf of the Tánaiste and Minister for Enterprise, Trade and Employment, Mary Coughlan, looked into the comparative cost of operating retail businesses in Ireland, Northern Ireland, Britain and the Netherlands.
It was commissioned following a survey by the National Consumer Agency (NCA) in June which found that selected branded grocery goods were up to 30 per cent more expensive in the south than the north.
Forfás's study, which was published today, shows that while operating costs for retailers in Dublin were on average 25 per cent higher than in Belfast, such costs accounted for only 20 to 25 per cent of the total cost of a retail good, meaning that the price differential between goods should only be 5 to 6 per cent higher in the capital.
The report also reveals that the cost base in Cork, Limerick and Galway is more competitive with locations in the UK than Dublin, which had the highest operating costs than in all of the other locations surveyed except London.
Publishing the study this afternoon, the Tánaiste said that while trading conditions are difficult at the moment, retailers could do more to reduce the price differential that remains once operating costs, principally labour, property and utilities, are accounted for.
"While we accept that the cost environment in Ireland is a contributory factor to higher retail prices, it does not explain north-south price differences of the magnitude that continue to exist," said Ms Coughlan.
According to the study, the cost of buying goods for resale was by far the biggest cost faced by retailers in the Republic and accounted for 75 to 80 per cent of their total costs.
The report concluded that while the slowdown in the economy should lead to some moderation in cost pressures, concerted actions are required to manage consumer and retailer costs in Ireland.
The Tánaiste referred to the recent surge in the value of the euro against sterling and said that retailers had factored higher operating costs in Ireland into their prices well before the euro's rise against sterling since the last quarter of 2007. She added that "the relative cost of doing business in Ireland and UK had not altered measurably over this period and, in fact, UK inflation had been almost double that in Ireland in the year to November 2008".
According to recent statistics from the Central Statistics Office (CSO), the retail sector employed 198,100 people at the end of May 2008.
The CSO estimates that there are over 29,000 wholesale and retail enterprises currently operating in the state.
