Irish retailers warn any move to cap food prices risks long-term damage

Food inflation is now well into double digits. Photo: Getty Images/iStockphoto

Sarah Collins

Retail groups have hit back at the idea of a food price cap, which is reportedly being discussed in the UK, saying it would be unworkable in Ireland.

Retail Excellence, Ibec group Retail Ireland and RGDATA, which represents family-owned shops, say there is enough competition in the sector here to drive down prices without government intervention.

“In general, it would be very difficult to implement, given Ireland has such an agriculture-based economy,” said Duncan Graham, managing director of Retail Excellence, which represents around 2,000 Irish-based retailers.

“The impact of this would be felt throughout the [food supply] chain. It would be detrimental in the long run and wouldn’t solve the problem.”

Food inflation is currently running at just over 13pc in Ireland, with grocery price inflation coming in at 16.5pc. Some staples, such as sugar, milk, eggs and butter, have surged in price by up to 40pc in the last year, though inflation is not as high here as in most other EU countries.

Retail Business Minister Neale Richmond is not in favour of capping prices, though the issue came up, in passing, at a meeting he had with retail representatives earlier this month.

It would be detrimental in the long run and wouldn’t solve the problem

The UK government is reportedly discussing a voluntary deal with supermarket bosses, inspired by the three-month “anti-inflation quarter” in place in France, which gives retailers discretion on which products to cap.

Irish law allows government to bring in mandatory price caps in an emergency. But the Competition and Consumer Protection Commission said recently there is “no evidence” that similar moves in Hungary and Croatia have worked, and said most other EU countries have dropped plans for price controls “because of the potential for unintended negative consequences”.

“The idea of a price cap or minimum pricing, it’s for the birds,” said Kevin Jephson, owner of Ardkeen Quality Food Store in Waterford.

“We did have minimum pricing, if you go back 40 years. But life was much simpler then. A pint of milk was a pint of milk. Categories are way too diverse now. It’s unworkable.

“I do feel that the grocery industry is a very competitive industry. To say it’s a cartel and that we’re all price gouging – it’s wrong.”

The idea of a price cap or minimum pricing, it’s for the birds

Retail Ireland, the Ibec group representing supermarket giants including Tesco, said “intense competition” in the sector and falling commodity prices will help drive down price tags on supermarket shelves.

“Retailers are actively working to minimise the impact on consumers of massive EU-wide commodity price increases, and this will continue,” Ibec said in an emailed statement. “Specific pricing decisions are a matter for individual retailers, but intense competition in the sector will ensure that consumers benefit from falling commodity prices.”

Tara Buckley, director general of retail trade association RGDATA, said the Government should tackle energy and insurance costs.

“For the retailers I represent, it is extremely challenging competing with the bigger retailers in the world on a daily basis. We are doing our damnedest to be as cost-effective as possible. The frustrating thing is that so many costs are out of our control – but it’s something the Government can do something about.”