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Aldi and Lidl most responsible for keeping food prices down
Martin Frawley



INCREASES in the price of food at supermarkets have slowed down dramatically since the arrival of discount retailers Aldi and Lidl, according to a recently published survey on food prices in Ireland.

The survey found that the cost of food increased by around 25% over the 10 year review period to mid-2005, while general prices rose by 30%.

And despite the widely held belief by Irish consumers that the introduction of the euro pushed up prices, the survey noted: "There has been a sustained reduction in food price relative to prices in general since the introduction of the euro in 2002."

The survey . . . 'Food Prices in Ireland' . . . was conducted by University College Cork for the Consumer Liaison Panel, which operates under the Department of Agriculture and Food. The consumer panel is chaired by RTE presenter Marian Finucane.

Rather than the removal of the groceries order, the survey suggests it is the supermarket price wars sparked by the arrival of Aldi and Lidl that have kept food prices down.

"Inter-retail competition continues to intensify, driven by the rapid increase in the number of competing stores. This has occurred since the arrival of the discounters, Aldi and Lidl, and more recently with the roll out of new stores by Tesco Ireland and Dunnes Stores. Multiple-store numbers (including Supervalu) increased by over 40% during the 1997 to 2005 period, " according to the survey.

With the relative drop in food prices directly related to the increase in supermarkets, the survey predicts that prices should continue to fall in the years ahead as the "increase in store numbers is set to continue".

But if consumers have gained overall, it is critically dependent on your shopping list. The survey noted several "dramatic" variations in price increases even between different foods in the one category.

Beef prices, for example, dropped by one percent in the 1995 to 2005 period under review, while lamb prices soared by 70% in the same period. This was largely a result of the outbreak of foot-and-mouth disease, which sparked a huge increase in demand for lamb, particularly from France. But the price of lamb has not returned to predisease levels since, the survey noted.

The price of one of the country's staple items . . . the potato . . .

jumped by 47% in the 10 years to 2005, while fresh vegetables in general increased by 15%.

Cheddar cheese increased by 35% while butter rose by 20% and milk by 10%.

Chocolate and sweets showed some of the highest increases.

These two sugar-based items recorded the highest increase of all items, rising by 50%, while in the same category sugar and sweeteners increased by just one percent. Breakfast cereals werealso high risers increasing by 45%, while in the same category bread rose by 31%.

While consumers have gained, albeit unevenly, farmers appear to have lost out, the survey shows.

"In the case of dairy products, the share of the retail price being appropriated by retailers has increased dramatically, " it noted.

While the milk price equivalents for butter and cheese have actually fallen for farmers and processors, the combined retail price for these products has increased substantially.

In the case of beef, the farmers' share of the retail price dropped from just over 39% in 1995 to 32% in 2005. Similarly, with lamb . . .

which rose by 70% . . . the farmers' share of the supermarket price has dropped from 42% to 30% in the same period.




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