Irish leader sends retailers a warning amid fears of 'greedflation'

Food retailers say consumers will benefit from reduced prices when input costs come down

Figures released on Thursday recorded Ireland's rate of inflation at 7.2 per cent. PA
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Food price controls could be introduced in Ireland to tackle rampant inflation in spite of a warning by Taoiseach Leo Varadkar that such measures come with risks for the economy.

The government has come under pressure to ensure high grocery costs are not merely fuelling supermarkets’ profits.

In the Irish parliament, questions have been raised over how much of the price rises are down to “greedflation” rather than increasing costs.

Food retailers say they have provided assurances that consumers will benefit from reduced prices in situations where input costs have lowered.

Mr Varadkar said the government was under “no illusions” about high inflation. Figures released on Thursday recorded its rate at 7.2 per cent, down from 7.7 per cent the previous month.

“As is often the case, energy inflation feeds into the cost of food, the cost of production, the cost of doing business, and as a result of that, families are seeing a big increase in their grocery bills, and the cost of the weekly shop,” he said.

He said the government was acting by taxing profits and engaging with the Competition and Consumer Protection Commission.

Mr Varadkar said Neale Richmond, Minister of State with responsibility for retail, had given retailers a “clear message” that the government expected prices to come down following the reduction of input costs, and wanted to see quick results.

Mr Richmond chaired a meeting of the Retail Forum on Wednesday,

“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.

“It is quite clear that many families and workers are struggling with increased costs at the supermarket checkout.

Taoiseach Leo Varadkar said he has not ruled out price controls. PA

“We have seen cuts to the price of butter, milk and bread prices in recent days. These are to be welcomed.

“I am pleased to say that I received assurances from retailers that, where reductions in input costs filter through to products, consumers will benefit from this.”

The next meeting of the Retail Forum is on June 21, when the government has said it expects further price cuts.

Retail Ireland, which represents major groceries, convenience stores and shopping centres, said the sector held off price increases “for as long as possible”.

“Specific pricing decisions are a matter for individual retailers, but intense competition in the sector will ensure that consumers benefit from falling commodity prices,” Retail Ireland director Arnold Dillon said.

“Retailers held off increasing prices for as 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.”

Mr Varadkar said he has not ruled out price controls.

“Yes, there is profiteering by some companies, and that is absolutely part of this. But it is one factor, not the sole factor,” he said.

On price controls, he said there was a risk of products becoming less available.

He said there was a clear message that prices must come down as input costs decrease.

People Before Profit TD Paul Murphy said: “What we’re experiencing, what we have been experiencing, is a profit-price spiral. It is not inflation that we’re seeing, it’s greedflation.”

Social Democrats leader Holly Cairns said “the extortionate price of energy and food is driving so many people to the brink”. She said real wages were down.

The Taoiseach also said that price controls come with risks.

“We know from socialist governments in the eastern Europe, in Russia, the Soviet Union, the consequences there,” he said. “Shortages, rationing, a black market. Not good things.”

Updated: May 11, 2023, 2:15 PM