Food price caps can threaten market stability and cause unintended consequences that may adversely impact consumers, Retail Ireland, the Ibec group that represents the Irish retail sector has said.

In response to a query from the Irish Farmers Journal, Retail Ireland stated that the Competition and Consumer Protection Commission (CCPC) has already made a definitive case against State price interventions.

“In its independent analysis of the grocery sector, the CCPC examined international attempts at retail price controls and explicitly concluded that it had not seen any evidence that price interventions have benefitted consumers,” Retail Ireland director Arnold Dillon said. Dillon said the CCPC also warned that artificial price interventions carry a significant risk of unintended consequences and may adversely impact consumers.

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Over the recent years, the CCPC’s successive reports on this issue highlight that:

  • Artificial caps distort supply chains and potentially reduce quality and choice.
  • CCPC data has confirmed that profit margins in the Irish grocery sector are not notably high and are in line with international benchmarks.
  • The Commission concluded that market competition between retailers is the single most effective mechanism to deliver value for consumers and it has kept Irish food inflation below the European average.

    • “Irish grocery retailers operate on incredibly tight margins in an intensely competitive market. Policy in this critical sector must be strictly evidence-based.

    “As the CCPC has made clear, ill-considered State interventions threaten market stability and potentially harm the very consumers they claim to protect,” Dillon stated.

    Sinn Féin see it as paramount that we have stable food prices, the party’s Pearse Doherty said.

    “We know farmers are operating on the slimmest margins – with many getting paid below the cost of production for the food they produce.

    “At the same time, we have seen food price inflation increase relentlessly for consumers while the primary producer seldom sees the benefit. We believe there is a need to examine the approaches we have seen in other countries where the State has intervened to ensure affordability. That is why we are calling for a Commission to examine ways of ensuring fair stable prices for end consumers and adequate margins for primary producers, who have growing input costs,” he said.