Written answers

Wednesday, 11 October 2006

Department of Enterprise, Trade and Employment

Grocery Industry

9:00 pm

Photo of Paul KehoePaul Kehoe (Wexford, Fine Gael)
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Question 27: To ask the Minister for Enterprise, Trade and Employment his assessment of food price rises during the course of 2006; and if he will make a statement on the matter. [31941/06]

Photo of Denis NaughtenDenis Naughten (Longford-Roscommon, Fine Gael)
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Question 160: To ask the Minister for Enterprise, Trade and Employment his assessment of food price rises during the course of 2006; and if he will make a statement on the matter. [32164/06]

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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Question 178: To ask the Minister for Enterprise, Trade and Employment the extent to which he has evidence to illustrate the degree to which prices rose or fell following the abolition of the groceries order; and if he will make a statement on the matter. [32382/06]

Photo of Micheál MartinMicheál Martin (Cork South Central, Fianna Fail)
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I propose to take Questions Nos. 27, 160 and 178 together.

I am aware that food prices have been fluctuating during the course of 2006. For example, recent CSO figures show that the prices of products previously covered by the Groceries Order fell by 0.5% in the five-month period from April to August. This is in contrast with a 0.3% increase in prices, for the same products, in the five-month period before the abolition of the Order.

However, while we are seeing a downward trend in some grocery prices, the Consumer Price Index also shows an increase in the price of fresh meat and fish, products which were not covered by the Groceries Order.

The Order was in place for 18 years and, in that time, it fundamentally altered the structure and composition of the grocery trade. It was abolished primarily because it allowed wholesalers and suppliers to determine minimum retail prices charged to consumers, thereby seriously constraining competition in the market.

I have always maintained that we should not expect to see fundamental changes in the sector in the short term following the abolition of the Order. This is because there are many factors which impact on prices of groceries in our shops. The lack of competition caused by the Groceries Order was only one such factor. Other factors include production costs, labour costs, interest rates, overheads, international exchange rates and so on.

Having said that, the implementation by one multiple of reductions in the price of thousands of products previously covered by the Order appears to have had a positive impact on competition in the market with other significant players adopting competitive pricing strategies. So while I believe that consumers are seeing some early benefits with these price reductions, I expect that the real benefits will only be felt over time as price competition increases at retail level.

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