LAST UPDATE | 10 May 2023

AN “OPEN AND FRANK” conversation was held with members of the Retail Forum this afternoon, according to Neale Richmond, the minister of state with responsibility for retail business.

Retail representative bodies, retailers and government departments sit on the forum which meets quarterly to discuss issues impacting the sector. 

Richmond moved the meeting forward in light of the rising cost of food.

In a statement after the meeting, he said the group discussed the “factors driving inflation for grocery goods which is higher than the general rate of inflation”.

“It is quite clear that many families and workers are struggling with increased costs at the supermarket checkout. We have seen cuts to the price of butter, milk and bread prices in recent days; these are to be welcomed.

“I am pleased to say that I received assurances from retailers that, where reductions in input costs filter through to products, consumers will benefit from this.

“Increased costs go beyond food; I raised particular concerns about the cost of essential staple items and there was broad agreement on the need for these items to remain competitive.

“I would like to thank the members for attending today at short notice and for their constructive approach and look forward to continuing our engagement over coming months. The Forum will meet again collectively to review this issue at the end of June,” said Richmond. 

His comments come as the Competition and Consumer Protection Commission (CCPC) has warned against introducing price controls on food, as the Government met with large retailers this afternoon.

Taoiseach Leo Varadkar told Fine Gael’s parliamentary party meeting this evening that there was a clear message from government to the retail sector that prices must come down as the input costs decrease.

During Leaders’ Questions Varadkar said that the Government received preliminary advice from the CCPC about how to deal with the high grocery prices.

He told the Dáil that the body “strongly” advised against introducing price controls on food.

“In the advice they caution strongly against the introduction of price controls,” Varadkar said.

“[They] point out, for example, that in Spain proposals to do so were abandoned because of the impact that it would have on small retailers and retailers in rural areas in particular that require higher margins to get by.

“The lack of evidence that where it’s been done in France and Greece that it has actually helped consumers and also the unintended consequence that if you control some prices, other prices that are not controlled then get put up even more.”

Asked by Sinn Féin leader Mary Lou McDonald whether or not the Government would publish the advice, Varadkar said that he had no problem in publishing it, but that it required the approval of Richmond and the CCPC.

Speaking earlier this week, Richmond said the Government had the power to introduce price caps on products but did not want to do that.

He added that while inflation had decreased in Ireland in the past year, this did not see prices reducing in turn.

“Inflation this time last year was running at about 10%, it is down to 5% now. We should be seeing prices coming down,” he told RTÉ’s The Week in Politics programme.

He added: “We are very worried that they haven’t and we want to engage openly and honestly with the retail sector.

“What is directly open to government is the powers under the 2007 Consumer Protection Act which allows the Government to introduce price caps on certain products if it so chooses.

“We really don’t want to do that, that comes with very serious consequences, but it is something that is open to the Government.”

Retail Ireland has denied that prices were higher in Ireland than the rest of the EU, arguing that there has been an average of about 27% across the EU in the last two years.

In a statement following the meeting, Retail Ireland’s Director, Arnold Dillon, said:

“The retail sector fully appreciates the concerns of customers at the high levels of food inflation. Retailers are actively working to minimise the impact on consumers of massive EU-wide commodity price increases and this will continue.

“Specific pricing decisions are a matter for individual retailers, but intense competition in the sector will ensure that consumers benefit from falling commodity prices. This is happening already and will continue.”

Dillon argued that there is a “significant lag” in how input costs increases translate into consumer price increases.

“Retailers held off increasing prices for a long as possible last year, but could not absorb the massive cost increases indefinitely. We expect general inflation and food inflation to ease as we move through the year,” Dillon said.

Duncan Graham, the managing director Retail Excellence, the country’s largest retail industry group, told Newstalk today that retailers are doing everything they can.

“What you’ve got is an incredibly competitive environment, particularly in Irish retail. The inflation rate in Ireland, compared to the rest of Europe at the moment in food, is lower, so retailers are trying not to pass on price increases to consumers in the same way that some other European retailers are.”

“There was a pledge that when we were in a position to pass on savings on commodity prices we would do so as quickly as we could but at the moment those prices aren’t dropping significantly.”

“This is not going to be something where consumers are going to see drops immediately.”

Following today’s meeting with retailers, Labour’s spokesperson on finance, Ged Nash accused the government of being “all mouth and no trousers” when it comes to tackling inflated prices at the supermarket checkout.

“I said earlier this week that we needed a clear list of actions from this Retail Forum that would result in alleviating the pressure on working people’s pockets and remove the dread they feel as they approach the checkout at the end of the weekly shop.

“What we got instead is more pleading and hoping from the government and Minister Richmond that the supermarkets will see fit to cooperate and play fair.

“Hope is not a policy and pleading is not action. This charade of a meeting shows that when it comes to bringing grocery bills down, this government is all mouth and no trousers,” he said.

High prices

Speaking to reporters this afternoon, Tánaiste Micheál Martin said he “acknowledges the increase … in grocery prices over the last while as part of the broader inflation situation we’ve experienced now since the end of Covid and the onset of the war on Ukraine and the energy price crisis that developed in the aftermath of that”. 

“The Government has, in an unprecedented way, intervened on helping people to cope with additional costs. Billions has been allocated by Government on specific measures from taxation reduction to and the reduction of costs of public services in health, education and transport and also then in terms of interventions in terms of direct support to people,” Martin said. 

“In terms of the specific area of the retail trade, there has historically been – over the last decade – significant competition within the retail trade and ultimately competition is what most effectively drives down prices,” he said. 

The Tánaiste added that “the overall situation, more generally, is getting better in terms of the rate of inflation reducing and that should feed into grocery and food prices eventually”. 

This afternoon, Tesco Ireland announced that it would be cutting the price of its own-brand bread by 10c. This means a 800g sliced pan will now cost 89c compared to 99c.

Aldi is also reducing the retail prices of its own brand bread products with effect from tomorrow.

This price reduction will see Aldi’s sliced pans loafs reduced by 10 cent each to 89 cent (white bread), 99 cent (brown bread) and €1.09 (white Mega-Toast) respectively.

Opposition parties have been pressuring the Government to bring transparency to food prices, starting with today’s meeting.

“The Government must forcefully insist on full scrutiny of the obscene profits being made by retailers at the expense of their customers,” said Social Democrats leader Holly Cairns.

Cairns said recent reductions in the price of milk and butter were “tokenistic and will do little to cut householders’ soaring grocery bills”, which she said have increased by €1,200 in the last year alone.

“It is deeply immoral for supermarkets to be fleecing their customers in the middle of a cost-of-living crisis. Grocery inflation is now running at more than 16 per cent – way ahead of general inflation – which suggests that retailers are making massive profits,” Cairns said.

“The major supermarkets insist they are not profiteering, yet there is no clarity about the profits of their Irish operations. The Government must insist on full transparency on the levels of profit they are generating in Ireland and make clear what action they will take to curb any greed exposed.”

Additional reporting by Tadgh McNally, Hayley Halpin and Christina Finn