Supermarkets will be urged by the Government to reduce grocery prices during a meeting of the Retail Forum on Wednesday afternoon. In recent days powers to bring in emergency price caps have been highlighted by Government figures as set out how they expect cuts to costs at the check-outs, though they have at all times stressed they do not want to use them. So what is the Retail Forum, does it have teeth or is its use simply a way to embarrass supermarkets into price cuts?
What is the Retail Forum and who are its members?
The forum was set up in 2014 with the purpose of facilitating discussion between the Government and the retail sector on actions that could be taken to support the industry and the growth of sustainable jobs in it. Its membership is made up of organisations such as Retail Ireland, Retail Excellence and supermarket chains like Tesco and Musgraves - which owns Supervalu. The forum is not designed as a means of forcing retailers to do anything so it does not have teeth as such. It usually meets on a quarterly basis. It was next due to meet on June 21st but Taoiseach Leo Varadkar asked Minister of State for Enterprise Neale Richmond to convene a special meeting to send a message to the supermarkets that “grocery prices must come down if their input costs come down”. That meeting is taking place on Wednesday afternoon.
What has happened with grocery prices?
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Ireland like other countries has experienced high levels of inflation since the end of the Covid-19 pandemic and due to the impact of the Russian war on Ukraine. Recent Kantar figures put grocery inflation at 16.6 per cent. Some retailers have comes have begun reducing the price of some dairy products in recent weeks, but the bills for households undoubtedly remain high.
What do the retailers say about this?
Arnold Dillon of the Ibec umbrella group Retail Ireland said that while grocery inflation in Ireland is high, it has been much higher across the EU with food inflation averaging about 27 per cent. He said food prices were coming down and pointed to the cost of milk and butter which fell between 5 and 10 per cent in recent weeks. He said: “a fall in commodity prices can take a significant time to work through the system”. He insists Irish supermarket sector is “highly competitive” and argued that for a decade before the start of the cost-of-living crisis began, grocery prices had fallen.
What does the Government say?
Taoiseach Leo Varadkar told the Dáil on Tuesday that Mr Richmond will be bringing a clear message to the Retail Forum from Government, that it’s understandable that shops increase prices when input prices like energy go up “But when input costs go down, we expect you to pass on those reductions to your customers”. The powers available to the Government to bring in price caps have been highlighted by some in Government over the last week. The Consumer Protection Act 2007 allows the government to set maximum prices for certain products in emergency situations. However, Mr Richmond said said the Government does not want to use such “draconian” price setting measures. He has signaled that the Coalition would prefer to see prices for consumers fall without using the strongest weapon available to it.
And Opposition politicians?
Labour Party TD Ged Nash has been vocal on the issue of high grocery prices and what he believes is “excessive profiteering” by supermarkets. He says he wants to see “delivery” from the Retail Forum meeting and it should be made clear to retailers that the Government is willing to use the “weapons” open to it with a warning that maximum price orders will be brought in for six months if prices are not cut in the coming weeks. He said caps had been brought in on certain staple goods in Hungary and Croatia and Greek supermarkets agreed to reduce prices after a meeting with the Government there in November. Sinn Féin’s Louise O’Reilly said it is not good enough to bring the retailers in for an early meeting and then not meet them again until the end of June. She said there should be fortnightly reporting from the Forum “so that we can see that prices are actually coming down and coming down for customers at the tills”.
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How will prices be monitored after Wednesday’s meeting?
The Department of Enterprises Retail Unit routinely keeps track of prices as to other state agencies. Aside from that, Mr Richmond is known to do his own price surveys of key foods in shops in his constituency. There are no plans to hold another Retail Forum meeting prior to the end of June as the Government believe that the six week timeframe is a fair one to allow supermarkets to cut prices. The Coalition is not preparing for price caps amid concern that they come with side-effects. There is a view that they have not worked in Hungary or Croatia while the “jury is out” on the Greek approach according to sources.
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If the Government does not want to bring in price caps, what’s the strategy to get retailers to reduce prices – embarrass them into doing it?
The embarrassment factor of being hauled into a Retail Forum meeting could perhaps do no harm to encourage price cuts. But the Government insists it wants to work with retailers to get costs down at the check-out in line with declining input costs. Ireland is said to be taking a similar approach to France where retailers were brought in and the Government there got commitments for price cuts between April and June. The Coalition expects to see “demonstrable moves” to bring prices down – especially on staple goods - by the next meeting of the Forum on June 21st. It should become apparent then if the softly-softly approach that appears to be the Government’s preferred strategy has worked.