Food sector denies it is driving high inflation

PUBLICANS and restaurant owners have rejected suggestions of profiteering after their sector was named as a primary contributor to high inflation.

The Forfás Consumer Pricing Report 2003 ranks Ireland as the most expensive country in the euro zone for pubs and restaurants.

The cost of socialising and dining out in pubs and restaurants rose by 8% last year, compared to the general inflation rate of 5%. Since 2000, price levels have risen by almost 22%.

Almost 18 cent of every Irish €1 is now spent in pubs and restaurants.

The sector was also said to be responsible for adding 30% to total inflation last year, through increased prices for food and drink.

However, the chief executive of the Restaurants Association of Ireland, Henry O’Neill, claimed restaurant owners had been left with no choice but to pass on price increases incurred by the trade to their customers.

“It’s often forgotten that restaurants are also consumers, who have to pay the same increases for food and drink. We are already operating on narrow margins of 3%, so we simply can’t afford to absorb these price rises ourselves,” said Mr O'Neill.

He claimed high labour and insurance costs, plus recent VAT increases, had helped to place Ireland at the top of the European league for the price of eating out, rather than profiteering.

“People need to realise that VAT on food in Spain is 7%, while there is also no excise on alcohol. In comparison, we have VAT rates of 13% and 21%.”

Mr O’Neill said the sector is being singled out for unfair criticism at a time when many restaurants are going out of business due to the economic downturn. “There are very few second-generation restaurant owners in Ireland, which shows how difficult a business we are operating in,” he said.

Although some publicans and restaurateurs have blamed tax increases for high levels of inflation, the Forfás report claims they were only partially responsible. It notes that a 7% increase in the price of beer last year was unrelated to any change in excise duties.

The study noted that food and drink costing €100 in Ireland would cost just €66 in Portugal, €76 in Spain and €83 in France. For example, a cup of coffee costs on average €2.80 here, compared to €1.77 in Spain, €2 in Belgium and €1.85 in France.

No spokespeople for either the Vintners’ Federation of Ireland or the Licensed Vintners Association were available for comment.