Blame farmers not supermarkets for the rising price of food
It seems that the great supermarket price gouging furore of last May and June is a ball of smoke. Under considerable pressure from the Opposition about 'out of control' food prices the Government asked the
Competition and Consumer Protection Commission
(CCPC) to revisit an analysis of competition in the grocery sector carried out in 2023.
The CCPC released its update last Thursday and the message is very much along the lines of nothing to see here. There is no denying that prices have gone up dramatically but the culprits, according to the CCPC, are not fat-cat supermarket bosses. If anything, the State agency comes perilously close to saying the supermarkets have shielded us from the price increases being demanded by that most cherished of Irish social classes, the farmers.
No one is saying that competition in the grocery sector is not all that it could be. The five large supermarket chains –
Dunnes Stores
,
Tesco
,
SuperValu
,
Lidl
and
Aldi
– have increased their combined market shares slightly to 93 per cent from 91 per cent over the past few years but this varies from month to month according to the CCPC.
READ MORE
Their current shares are Dunnes Stores (23.6 per cent), Tesco (23.3 per cent), SuperValu (20.2 per cent), Lidl (14 per cent), and Aldi (11.8 per cent).
The important issue, according the CCPC is market concentration, which is a measure of a participant's ability to exercise market power and to lower competition. The review found that market concentration in Ireland is decreasing and is currently 1,735 on something called the Herfindahl-Hirschman Index (HHI).
A market with a HHI score of less than 1,500 is considered competitive, a HHI between 1,500 and 2,500 shows moderate levels of competition and concentration.
Competition is increasing, they argue, with Aldi, Lidl and Tesco all publicly committed to opening new stores and the continued investment in own brands by all the players. You may not be feeling it but according to the CCPC: 'Overall, the grocery retail sector demonstrates positive signs of competitive dynamics with new products and services and a strong level of competition on price including aggressive marketing to consumers on price offers.'
It notes that while we have experienced a 27 per cent increase in prices from 2021 up to June 2025 this is well below the European Union average, which has risen by 35 per cent over the same period. They also note that Ireland's rate of grocery price inflation has been below the EU average for 15 of the past 16 years (every year since the 2008 financial crisis apart from 2024).
'Overall, the high-level inflation figures do not suggest any significant market problems in the Irish grocery retail sector. If anything, the evidence suggests that Irish consumers have experienced significant price benefits compared to European counterparts,' concludes the CCPC.
It's not quite 'stop your whinging, you don't know how good you have it', but it's close. It is certainly not what the Government was expecting or wanted to hear. Neither is the assertion that supermarkets are to be lauded for keeping prices down in the face of demands from food producers.
'There is a strong argument to suggest that this benefit [lower than average price inflation] has been influenced by the increased competition in the grocery retail sector discussed above,' the consumer watchdog ventures.
The CCPC doesn't get into why farmers are pushing up their prices by more than their costs but the answer is probably the same reason any business would: because they can in a high-inflation environment
The CCPC sees two broad reasons for why food prices are going up. The first is simply that Ireland is an expensive place. They cite structural factors in the Irish economy such as higher wages, geographic location and higher costs in construction, legal services and insurance, which push up prices here.
The second reason is that food producers are increasing their margins.
'We can see that up until 2024, agricultural output prices largely tracked agricultural input prices. But in the very recent period, agricultural output prices have shown a strong increase compared to agricultural input prices,' according to the CCPC.
It notes that agricultural output prices rose by 19.3 per cent during 2024, well above the EU average of 2.6 per cent for the same period.
The CCPC doesn't get into why farmers are pushing up their prices by more than their costs but the answer is probably the same reason any business would: because they can in a high-inflation environment.
There is another argument about what constitutes sustainable and fair margins in Irish farming but that is not much use to the Government. Politically, it is one thing scapegoating large supermarket chains for the rise in the price of groceries and associated public annoyance. It's another thing altogether blaming farmers.
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