Prices in Irish supermarkets should be falling faster than they are as the huge Brexit surge in the value of the euro against sterling ought to be weighing on the grocery foodstuffs imported from Britain, according to leading economist Alan McQuaid.
“One thing you can conclude is that retailers are trying to boost margins after a very difficult period,” said Mr McQuaid.
The comments by the Merrion Capital chief economist come as the Kantar Worldpanel poll of Irish supermarkets shows that, as the first anniversary of the Brexit vote looms, grocery prices have barely fallen at all.
According to Kantar, 30,000 grocery items in Irish supermarkets fell an average 0.2% in the 12 weeks ending May 21 from the same period in 2016. The euro has soared almost 11% since the Brexit vote, which ought to have helped push down grocery prices by significant levels.
Retailers import a huge range of grocery items from across the Irish Sea.
Dermot O’Leary, chief economist at Goodbody, said overall Irish inflation was still “well below” UK inflation rates.
“Other factors [are] at play too,” he said. “It is likely that the low value of sterling will keep goods inflation in check over the coming 12 months.”
Despite price deflation, the Kantar survey shows that the Irish grocery market, which rings up about €10.3bn in annual sales, has grown.
“With the average price per pack falling slightly, growth has been driven by households buying extra items, with the average shopping basket increasing in size,” said Kantar.
Own-label goods now account for over half of all Irish grocery spend.
With 22.5% of the market, SuperValu kept its lead in the Irish supermarket wars over Tesco in second place, which edged out Dunnes Stores in third, according to Kantar.
© Irish Examiner Ltd. All rights reserved