Retailers deny price gouging as farmers warn high prices are the new normal

Irish Times

a day ago

The
surge
in
food
prices in recent years is the 'new normal' and a consequence of more sustainable farming practices and tighter regulation rather than a temporary aberration, a leading
farming
group has warned.
And retailers have insisted they are not profiteering at the expense of Irish consumers, their margins modest and grocery inflation in the State low by European standards.
Data published by the Central Statistics Office
(CSO) on Thursday points to a year-on-year price increase across the food and non-alcoholic drink sector of 4.6 per cent.
However, in some areas, including meat and dairy, the price hikes are in double digits.
According to the CSO, butter, which sells for around €3.99 a pound for own store brands and €5.49 for Kerrygold, is €1.10 more expensive than this time last year.
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Other dairy basics have also recorded substantial increases, with shoppers paying, on average, 95 cent a kilo more for cheddar cheese and 27 cent more for a litre of milk.
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Price of grocery staples running well ahead of general inflation
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The latest increasers come on top three years of food inflation that have added in excess of €3,000 on to many households' annual bills, with no prospect of relief on the horizon.
Denis Drennan of the Irish Creamery Milk Suppliers Association (ICMSA) told The Irish Times that it was 'more than a little irritating to be listening to politicians expressing amazement and concern about the surge in food prices when those same politicians seemed to have no problem at all voting through measures often directly responsible for heaping up higher costs on the farmers and processors producing that food.'
He said regulations that now 'completely set the context for farming cost money, and what's really irritating – certainly from ICMSA's view – is the implication that, somehow, the farmers should have absorbed the increased costs out of our income, out of our margin'.
He warned that the increases consumers have faced in recent years are not 'any kind of 'price spike' or aberration' but were 'the new normal'.
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Irish people more concerned about cost of food than counterparts
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'Getting the food of the mandated standard to the fridge of your local supermarket has a cost – economically and environmentally – and that cost has to be paid,' said Drennan.
He pointed to what he described as 'a decade or more when consumers were allowed to believe in the fantasy that all the change and astronomical expense involved in transitioning to low-emissions farming and primary food production was going to happen from the supermarket fridge backwards to the farm without any change or cost to the consumer. That was just a fantasy, and we now see the consternation when consumers realise that, actually, everyone is going to have to pay more for the new system.'
Drennan also pointed to data which suggests that previous generations 'spent more than twice what we are [spending] as a percentage of the average family's disposable income. Irish consumers are not overpaying now; the data suggests they've been underpaying for decades and are only now starting to get a glimpse of what their food really costs.'
Arnold Dillion of Retail Ireland, the Ibec umbrella group that represents supermarkets, said margins in grocery retail were low, with recent price increases 'overwhelmingly due to cost increases further up the supply chain'.
He said that despite an increase in inflationary pressures in some categories, 'Irish food inflation trends remains below the EU average', and he pointed to a 2023 report by the Competition and Consumer Protection Commission (CCPC) which stated that the Irish grocery market 'remains highly competitive'.
He suggested that the Irish market was 'highly competitive, profit margins are tight, and pricing decisions are primarily shaped by external cost pressures. The financial information in the public domain confirms that Irish grocery retailers are not earning abnormal profits, and are operating in full compliance with legal and regulatory standards.'