Forfas urges action on North-South price gap

RETAILERS HAVE been urged to do more to reduce their prices as a new study reveals that higher operating costs in Dublin alone do not explain the price disparity with shops in the North.

The study, which was commissioned by Forfás on behalf of the Tánaiste and Minister for Enterprise, Trade and Employment, Mary Coughlan, looked at the comparative cost of operating retail businesses in the Republic, Northern Ireland, Britain and the Netherlands. It was commissioned following a survey by the National Consumer Agency in June which found that selected branded grocery goods were up to 30 per cent more expensive in the South than in the North.

Forfás's study shows that while operating costs for retailers in Dublin were on average 25 per cent higher than in Belfast, such costs accounted for only 20 to 25 per cent of the total cost of a retail item, meaning the price differential between goods should only be 5 to 6 per cent higher in the capital. The report also reveals that the cost base in Cork, Limerick and Galway is more competitive with locations in the UK than with Dublin, which had the highest operating costs of all of the other locations surveyed, except London.

The Tánaiste said that although trading conditions were difficult, retailers could do more to reduce the price differential that remains once operating costs - principally labour, property and utilities - are accounted for.

"While we accept that the cost environment in Ireland is a contributory factor to higher retail prices, it does not explain North-South price differences of the magnitude that continue to exist," Ms Coughlan said.

According to the study, the cost of buying goods for resale was by far the biggest cost faced by retailers in the Republic and accounted for 75 to 80 per cent of their total costs.

The report concluded that concerted actions were required to manage consumer and retailer costs in Ireland.