Irish supermarkets will have six weeks to start lowering prices of key staples before the Government starts considering measures aimed at forcing their hands, the Minister with responsibility for the sector has warned.
“We should be seeing prices coming down and the excuse of a lag between input costs falling and prices falling is no longer acceptable,” Minister for State at the Department of Enterprise Neale Richmond said.
He said he would expect to see “discernible progress” on pricing before the end of June and added that he would be making that point at a hastily convened meeting of the State’s Retail Forum on Wednesday.
The forum meets this week and again on June 21st. It is made up of representatives of the retail industry with organisations such as Retail Ireland, Retail Excellence and supermarket chains including Tesco and Musgraves.
Mr Richmond said that while the Government had the power to introduce price caps on certain products in emergency situations, he would be reluctant to go down that road and would instead focus initially on persuading retailers to bring their prices down to better reflect a fall in input costs.
He pointed to France where its equivalent of the Retail Forum was convened in the spring with a commitment extracted from large supermarket chains to lower prices between April and June.
He noted that other countries such as Hungary and Croatia had imposed price caps with mixed results.
“People are rightly angry and they expect us to do something and we are doing that,” Mr Richmond said.
Arnold Dillon of the Ibec umbrella group Retail Ireland will attend the meeting and he said that while grocery inflation in Ireland is undoubtedly high – recent Kantar figures put it as 16.6 per cent – it was much higher across the EU with food inflation averaging about 27 per cent.
“Consumers are obviously talking about higher prices but it is not an Irish phenomena by any means,” he said. “This debate has been raging across Europe.”
He said Ireland had the lowest rate of inflation of its closest EU neighbours and suggested that Irish retailers are “more effective than others at protecting consumers from price trends”.
He said food prices were coming down and pointed to the cost of milk and butter which fell between 5 and 10 per cent in recent weeks.
He noted that “a fall in commodity prices can take a significant time to work through the system with some working through faster than others. Milk prices have fallen, wheat prices might take longer”.
He said the Irish supermarket sector was “highly competitive” and argued that for a decade before the start of the cost-of-living crisis began, grocery prices had fallen.
“The reality is that Ireland has been well served by competition and that has meant inflation has been lower than it might have been, and I think we can be confident that it will deliver and while there is a lag issue, prices will fall.”
