LAST UPDATE | 8 Jun 2023
FINANCE MINISTER MICHAEL McGrath has said that it’s “only a matter of time” before more grocery chains cut prices.
Tesco has today lowered prices on more than 700 products, which McGrath says is “quite a significant turning point” for grocery price inflation.
The move follows more than a year of continuous increases on everyday essentials that has strained household budgets.
“These reductions are very good news for consumers and I think they’ll be warmly welcomed,” McGrath told RTÉ’s Morning Ireland.
“Everybody has seen the really significant spike in prices over the last 18 months or so.
“We know that people are very price-sensitive, they will shop around and they will vote with their feet, and I would expect that other significant retail providers in the grocery space will respond but that’s a matter for themselves.
“But people certainly will respond to good offers. and I think will adjust their shopping patterns.”
McGrath will meet with retailers again in the coming weeks to discuss whether the government should interfere with grocery prices.
Consumers, he said, “will expect others now to follow suit”.
“I think it’s only a matter of time before other grocery providers respond,” said the Minister.
“As inputs fall, we do expect the retailers to pass on the benefit of that to consumers.”
In response to the news from Tesco, a spokesperson for Lidl said the company carries out “weekly price checks on Lidl products versus competitors”.
“We are confident that we will continue to be significantly cheaper than other retailers,” the spokesperson said.
“Having reviewed Tesco’s recent price drops announced this morning, the vast majority of products reduced are predominantly national brands which Lidl does not carry or carries cheaper own brand options,” they said.
“Of the private label products reduced by Tesco, the vast majority are still more expensive than Lidl every day prices.”
Aldi’s group managing director Niall O’Connor said the supermarket’s prices are “already lower on comparable products”.
“We’ll continue to monitor prices and the market to ensure that we always have a discount versus the more expensive full price supermarkets, whether on a basket of goods or a full weekly shop and especially on our own label range, which accounts for 95% of our products,” O’Connor said.
“That’s our promise to customers, and it will not change.”
It comes as new figures from the Central Statistics Office (CSO) showed that the annual rate of inflation slowed to 6.6% in May, compared to 7.2% in April.
This is the twentieth straight month where the annual increase in consumer prices has been at least 5.0%
The figures also show that consumer prices rose by 0.3% on a monthly basis, with the largest growth seen in restaurants and hotels (1.6%) and alcoholic beverages and tobacco (1.0%).
According to the latest figures, the price of food and non-alcoholic drinks rose by 12.7% in the year due to higher prices for meat, bread and cereals, milk, cheese, eggs and vegetables.
However, this was slightly down on the rate of food inflation in April, which rose by 13.1% in the year.
The National Average Prices for May also show that the price for a large white sliced pan rose by 18c to €1.68 compared to the same time last year, while the same size brown sliced pan was up 17c in the year.
Two litres of full fat milk increased by 35c to €2.22 while the average price of Irish cheddar per kg rose by €1.45 to €10.55. Butter per pound was 40c higher at €3.76 compared to May last year.
The CSO said the sectors which saw the largest decline in prices on a monthly basis were transport (-1.2%), housing, water, electricity, gas and other fuels (-0.1%) and communications (-0.1 %).
However, the largest annual increases were seen in housing, water, electricity, gas and other fuels (16.4%).
CSO statistician Anthony Dawson said this was due to increased electricity and gas costs, which were up 34.7% and 47.4%, respectively, along with higher mortgage interest repayments, up 44.1%.
Meanwhile, the State is to pay around €1.5 million to a European relocation system, as Ireland struggles to accommodate more refugees, the Irish Examiner reported today.
Asked about this on Morning Ireland, McGrath said: “We have been very honest and open with people about the pressure that is there in terms of accommodation provision around the country.
“What has been achieved is quite remarkable. Over 85,000 people now are being accommodated by the State – over 65,000 from Ukraine and over 20,000 international protection applicants.
“The pressures are there, and we’re upfront about that.”
A discussion will be had in Cabinet today about alternative way for Ireland to fulfill its international obligation “in full”.
“I think we’ve done that to date by receiving the number of people that we have.”
With reporting by Hayley Halpin
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