Saturday 21 October 2017

Lower prices are likely to become the new norm

While shoppers will be happy to have a few extra coins in their pockets, falling prices present a challenge for retailers. Photo: Bloomberg
While shoppers will be happy to have a few extra coins in their pockets, falling prices present a challenge for retailers. Photo: Bloomberg

David Berry

For the first time in almost two years, Ireland's grocery market has fallen into deflation. With the top five supermarkets controlling over 85pc of grocery spend, Ireland has one of the most competitive markets in Europe. The result is a particularly fierce battle to attract customers, so retailers feel particular pressure to keep prices low.

In an already tricky environment for grocers, the recent currency fluctuations have tipped the market into deflation, with prices falling 0.2pc in the 12 weeks to March 26, 2017.

Since the UK's EU membership referendum, uncertainty has caused the value of the pound to fall to just €1.17 - a drop of more than 10pc. Exchange rates for purchases are often agreed many months in advance, which explains why we're only just seeing this slump reflected in grocery prices.

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