Friday 24 March 2017

Weighing up the cost of groceries

PRICES of branded goods in the main Irish supermarket chains have fallen by 14pc in 18 months. In the same period, food prices fell by 8.4pc compared with a rise of 0.5pc in the rest of the European Union.

These figures, though most welcome, are not unalloyed good news. Irish retail prices are still very high by any standards. And the present trend may not last. The price reductions owe something to the recession, but also a good deal to currency movements and the increased rate of value added tax in the United Kingdom which almost ended the cross-border shopping rush. The next price change could be upwards, on foot of grain shortages caused by the disastrous drought and fires in Russia and Ukraine.

Whether more intense competition was a factor in the retail price war is open to question. Ann Fitzgerald, chief executive of the National Consumer Council, says it's over. She thinks there is too little competition, and cites the fact that margins on branded goods differ insignificantly between Tesco, Dunnes, Superquinn and SuperValu.

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