GROCERY ORDER:THE ABOLITION of the Groceries Order in April 2006 was hailed by market liberalisers as a coup for the consumer which would result in lower prices.
Consumers would save up to €500 a year as a result, the Competition Authority argued.
Over two years on, food prices are spiralling upward and any initial benefits from the abolition of the order have long since been set to naught by global inflation.
So was it a mistake to get rid of the 50-year-old controls on basic food items encompassed by the order, which banned below-cost invoicing and effectively stopped large retailers passing on bulk purchase discounts to customers?
Those who campaigned for the change are unrepentant. Ann Fitzgerald of the National Consumer Agency says the order was an "appalling" piece of anti-consumer legislation: "You cannot wipe away the oil price increases, or factors like the growth in demand for food from the Far East, but you can say it was lousy because it stopped discounts being passed on to consumers."
"The reason there are food riots in Asia is not because we abolished the groceries order," says Bill Prasifka, head of the Competition Authority. "There are international trends pushing up the cost of food and Ireland is not immune to them."
Fitzgerald and Prasifka say there was a definite downward trend in food prices once covered by the order in the six to nine months after it was abolished. Then, they assert, international trends took over and prices rose.
A report by the authority shos that after abolition, the prices of many items once covered by the order dropped slightly, but these falls were more than offset by price increases for other goods. In the first eight months after abolition, the price of former Groceries Order items fell by 1.5 per cent, while the price of items not covered by the order (fresh meat, fruit and vegetables) rose 2.4 per cent.
Eighteen months after abolition, the price of Grocery Order items were up 3.8 per cent, while non Grocery Order items were up 4 per cent. There is no evidence that any of the authorities have policed the behaviour of big retailers post-abolition and retail consolidation continues apace.
As economist Alan Matthews points out, food inflation accounts for less than 1 per cent of overall inflation. The effect, therefore, of abolishing the Groceries Order was always going to be minimal.
