Six months after the abolition of the Groceries Order there is still no sign of serious price competition benefiting Irish consumers, according to the new Director of Consumer Affairs. Paul Cullen reports.
Ann Fitzgerald, who was appointed to succeed Carmel Foley last month, welcomed the announcement by Tesco yesterday that it had reduced the price of over 5,000 grocery items since May.
However, she said most supermarkets and convenience chains did not seem to be competing on price, as predicted before the abolition of the order last March.
"Where is the competition and what is it doing? I would have expected to see competition on price faster than it has come about," she said. As a result, she said consumers continued to pay more than they should.
The report of the Consumer Strategy Group found that retailers enjoyed average discounts of 18 per cent on items covered by the order, which were not passed on to consumers.
Ms Fitzgerald, who also chairs the National Consumer Agency (NCA), said she hoped consumers would realise they had the power to "move markets".
"I would love to see Irish consumers becoming more demanding and more willing to shop around."
So far the NCA's efforts to encourage other retailers to cut prices have been unsuccessful. One leading chain failed to respond to its requests for a meeting, while others indicated they did not intend to pass on invoice savings to consumers.
Tesco said it planned to cut the price of a further 5,000 items previously covered by the Groceries Order by early next year.
The order prevented retailers from passing on the benefit of bulk discounts to retailers.
Tesco claims shoppers will enjoy an average reduction of 4.7 per cent on a wide range of everyday items. No prices were increased to compensate for these reductions.
"This price reduction programme is the most significant ever undertaken in the Irish supermarket industry. It means that the prices of 5,000 grocery products are now lower than six months ago, despite national inflation currently running at over 4 per cent," said Dermot Breen of Tesco Ireland.
Fine Gael, which opposed the abolition of the order, has claimed that prices have actually risen since.
Recent figures showed that Irish food prices are 23 per cent higher than the EU average.