Two months ago, food and drink industry lobbyists warned that increasing production costs would lead to greater grocery bills for consumers as costs get passed on. However there is little evidence of these increases yet due to intense competition in the sector and fierce price resistance among consumers.

"It hasn't happened so far and retailers will resist it for as long as they can. They won't roll over, " said RGDATA's director general, Tara Buckley.

"They [retailers] are the ones that deal directly with consumers so they will be the ones getting their reaction. Nobody likes paying more for food and people have lots of choice. It's a very diverse market and there is very strong competition there, " she said.

Food inflation has been running consistently lower than general inflation since 2002. According to CSO figures, food and non-alcoholic beverages have increased by just 3.5% to the end of 2006 while overall inflation was 15.7%.

In the same period energy costs rose 44%, while this year food prices have shown only a very moderate increase.

Buckley, who is also the representative for the wholesale sector, did not rule out increases in future saying that a move towards cheap food prices is not desirable.

"The signs coming from the food producers are a bit ominous, " she said. "A drive towards cheap food is not in anybody's interests. You get problems around quality that they have had in other countries, " she said. She believes the government could be doing more in other areas to curb rising costs and take some of the pressure off retailers.

"There are a lot of specific things that government could do to take some of these costs out of the sector. Waste management is the big one and is a growing cost. We have been lobbying for specific things to be done in that area, " added Buckley.