Era of heavy discounting ‘nearing end’

DESPITE prices falling 6.6% over the last year the era of heavy discounting is coming to an end as food and clothing prices edge higher.

Many food items rose in price last month and overall food costs were down 0.5% compared with an average drop of 1.1% in the previous four months.

Clothes prices, although falling 1% last month have begun to edge up in the previous months increasing 4.4% in August and 3.3% in September.

Alan McQuaid of Bloxham Stockbrokers said the higher food prices could reflect higher global commodity prices.

“I would be surprised if there wasn’t some kind of food price war among the supermarkets in the run-up to Christmas.

“However, I do feel that we have reached the bottom as regards deflation in general, and the annual rate of decline should start to ease back in the coming months,” he said.

Last months prices for flour, beef, pork, cheese, fruit, fresh vegetables and soup all increased.

Despite the signs of increases however, food prices are still down 6.4% over the last year and clothing prices are down 12.8%. Overall, consumer prices are down 6.6% over the year and fell 0.2% in October, according to the CSO.

Shoppers have benefited from a supermarket price war over the last year and heavy discounting by retailers as they battled for customers.

According to the CSO figures there was a massive 21% increase in the cost of third-level education last month as the price of going to college surged. The cost of primary and secondary education both increased just over 2% also.

The era of heavy discounting over the last year has made Ireland more competitive at a time when prices were rising in the euro area, according to Davy analyst, Rossa White.

“Ireland has closed the price level gap by 3.4% with the euro area so far, but there’s more to go,” he said.

Retail Ireland director Torlach Denihan said despite the price falls, retail sales are poor and 30,000 former retailer workers joined the Live Register over the last year.