Are supermarkets ‘profiteering’ or just passing on price rises?
Government sends ‘clear message’ that supermarket prices must fall faster, Varadkar stated, as Neale Richmond met with the retailers’ forum to pass on concerns about soaring food prices.
The Government has given a stern warning to retailers and supermarkets that prices should fall at a meeting of the Retail Forum, Taoiseach. Mr Varadkar said prices had started to come down but “not enough”.
Minister of State at the Department of Enterprise, Trade and Employment Neale Richmond discussed concerns over high food prices with the retail as well as food producers.
Mr Varadkar said during Leaders’ Questions in the Dáil “When input prices like energy costs went up, retailers increased their prices, that’s understandable. Your input costs go up, you have to pass on some of that increase to your customers.
Six weeks
Mr Richmond told the major supermarket groups that they will have to show a “demonstrable reduction” in prices at the checkout, and that he will be expecting these cuts to be in place ahead of the next scheduled meeting of the retail forum on June 21.
Inflation
In a statement after the meeting, Mr Richmond 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 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.
Taoiseach Leo Varadkar told Fine Gael’s parliamentary party meeting that there was a clear message from government to the retail sector that prices must come down as the input costs decrease.
High grocery prices
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.
Price caps
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.
