Maev Martin talks to Neale Richmond, the Minister with special responsibility for Employment Affairs and Retail Business, about his meeting with industry representative bodies at the Retail Forum earlier this month, and about government plans to ensure that the costs consumers pay in the supermarket are “reasonable and realistic”
Grocery prices have dominated the news headlines in recent weeks, and while retailers have been quick to reduce the price of butter and milk, and more recently bread, price reductions on other grocery items and categories aren’t coming quickly enough for consumers – or for the government.
The 10 May meeting of the Retail Forum was convened specifically to discuss inflation in the grocery sector and what Minister Richmond described as “the very considerable worrying concerns that are coming in to all of our offices as TDs every day about the price of the weekly shop.”
I asked the Minister if he was concerned about a specific product category or if shoppers were reporting pressures across the board.
“I am very concerned at the high cost of staple goods that families just cannot avoid, from bread, chicken and mince, to everyday items like nappies, deodorant and toothpaste,” he told Checkout.
“The cost of these items is putting a lot of pressure on families across the country."
It had been reported in the national press that the Minister would be telling the major supermarket groups at the Retail Forum that they would have to show a “demonstrable reduction” in prices at the checkout and that these price cuts would have to be in place ahead of the next scheduled meeting of the Retail Forum on 21 June.
“I had an open and frank conversation with the members of the Retail Forum where we discussed the factors driving inflation for grocery goods which is higher than the general rate of inflation,” he said.
“The retail forum meets on a quarterly basis, with the next meeting taking place at the end of June, so the Government will continue to monitor the issue of grocery prices and absolutely will be revisiting it in June to see what progress has been made.
"The high prices in our supermarkets are no secret, so when the prices come down we should all see the benefit in our shopping baskets.
"Retailers will be able to discuss this issue and the efforts they are making at the Retail Forum.”
Lag Between Falling Input Costs & Prices
Minister Richmond has been quoted as saying: “We should be seeing prices coming down and the excuse of a lag between input costs falling and prices falling is no longer acceptable.”
However, Arnold Dillon of Retail Ireland has pointed out that food prices are coming down, citing the fall of between 5% and 10% in the cost of milk and butter in recent weeks.
He noted that “a fall in commodity prices can take a significant time to work through the system with some working through faster than others,” and he said that “while there is a lag issue, prices will fall.”
Was the Minister a bit premature in calling the 10 May meeting to give retailers such a tight timeframe to roll out price decreases across the board?
“The recent price cuts in bread, milk and butter have been extremely welcome and are a positive sign from our retailers,” he responds.
“There are many factors at play when it comes to food costs, but Government have been clear that, where possible, costs should come down for customers. I am pleased to say that I received assurances from retailers at the Retail Forum that, where reductions in input costs filter through to products, consumers will benefit from this.”
A Fair Price For Farmers
Minister Neale has also been quoted as saying that he believes there is a lot more that retailers and the food distribution companies can do to reduce prices while maintaining a fair price for farmers across the country.
What does he believe retailers can and should be doing in this regard?
“I have met the IFA to discuss this and I have heard their concerns on this issue,” he said.
“Farmers have not seen the same increases in their payments that retailers have seen over the past year, though their costs have also increased.
"Retailers must ensure that when their prices come down, they do not do so in a way that harms our farmers.”
I also asked the Minister if the 10 May meeting was a way of preparing the retail representative bodies for the introduction of price caps, either across the board or on certain product categories.
“No, price caps can have unintended consequences, leading to large queues, food shortages and rationing,” he said. “This is not something we want to see introduced here.”
Lowest Rate of Inflation
Irish food inflation has been amongst the lowest in Europe over recent years.
Average EU food inflation has been 27% over the last two years. In Ireland it was 17%.
In the last year, average EU food inflation has been 19%. In Ireland it was 13%.
Minister Richmond has cited France where the equivalent of our Retail Forum made a commitment that large supermarket chains would lower prices between April and June.
“French grocery retailers have been asked to cut prices between April and June, and when this period is over the Government has asked that they renegotiate prices with their wholesalers to reflect these price cuts,” he said.
“This is similar to the approach we are taking. We do not want to be combative in our approach. We want to work with retailers to solve this issue.”
Following the 10 May meeting of the Retail Forum, Retail Ireland director Arnold Dillon said the retail sector fully appreciates the concerns of customers at the high levels of food inflation.
“Retailers are actively working to minimise the impact on consumers of massive EU-wide commodity price increases and this will continue,” he said.
“Specific pricing decisions are a matter for individual retailers, but intense competition in the sector will ensure that consumers benefit from falling commodity prices.
"This is happening already and will continue.
"Prior to the recent period of inflation, Irish food prices fell for over ten years, driven by intense price competition in the market.
"There is a significant lag in how energy and commodity cost increases translate into consumer prices.
"Retailers held off increasing prices for a long as possible last year, but could not absorb the massive cost increases indefinitely.
"We expect general inflation and food inflation to ease as we move through the year.”
Insurance, Energy & Banking
RGDATA recently refuted any suggestion that independent grocers are involved in price gouging.
It said: ‘To keep food prices low we need action from government to bring insurance costs down - shops are still paying the highest prices in Europe for liability insurance.
"We need action to tackle energy costs that are boosting the energy companies profits to record levels. We need action on banking costs to curb profiteering by banks.’
“Tackling the rising cost of insurance is a whole of Government effort, and my colleague with responsibility for insurance, Minister Jennifer Carroll Mac Neill, is doing a huge amount of work in this area,” said Minister Richmond.
“We have seen premiums fall in motor insurance, and pay outs have fallen in line with the focus on cases using a mediation service offered by the Personal Injuries Assessment Board, rather than going to the courts.
"There is, of course, room for improvement here for businesses and I know Minister Carroll Mac Neill is working closely with insurance companies to ensure we see progress on this.”
Sustainability & Employment Costs
RGDATA has also stated that ‘retailers are really concerned at the impact of a host of new government employment, sustainability and other measures that will add to their costs and which have had no proper assessment of the economic and societal impact or if they will have any positive impact at all.’
Will Minister Richmond be consulting retailer representative bodies about the new employment and sustainability measures that are planned by government?
“In my dealings with retailers and their representative bodies I regularly discuss with them the impacts of new employment rights and sustainability measures that have been introduced over recent months and years,” he said.
“There are a multitude of supports available to help businesses of all sizes become more sustainable, from the Local Enterprise Office to Enterprise Ireland and the Sustainable Energy Authority of Ireland.
"Employment rights are being gradually increased, so businesses have time to prepare for their introduction."
© 2023 Checkout – your source for the latest Irish retail news. Article by Maev Martin. Click subscribe to sign up for the Checkout print edition.