It is a reflection of the times that news this week suggesting grocery inflation now stands at just below 10 per cent was greeted with a sense of relief across the retail network and in Government. And, of course, in Irish homes.
The rate at which grocery prices here are increasing has eased and now stands at 9.8 per cent, the first time food price inflation has been in single digits this year and the lowest level in more than 12 months.
“This is the sixth month in a row that there’s been a drop in inflation, although it’s still high,” said business development director Emer Healy, a retail analyst at Kantar.
“Compared to last month’s inflation rate of 10.5 per cent, there has been a significant drop of 0.7 per cent. The positive news is that this is the lowest inflation level we have seen since September 2022 and we expect this to continue to decline over the coming months,” she said.
It is worth bearing in mind that less than six months ago, grocery prices in Ireland were climbing at a rate of close to 16 per cent per month.
Given that outside of a mortgage or rent, groceries are probably the single biggest cost facing most Irish families, and the one that comes into the sharpest relief at this time of year when food spending tends to go through the roof, it is an area of critical importance when it comes to household finances.
But how much do Irish consumers spend on groceries?
If a total of €150 is spent in supermarkets each week the annual cost comes in at just under €8,000 – a figure which does not allow for a Christmas blowout or deviation from normal spending patterns.
And what is the new year likely to bring and what can consumers do to try and keep costs down even faced with double digit grocery price hikes?
While there has undoubtedly been downward price pressure on some products in recent weeks, retail analysts have highlighted the harsh reality which is that grocery prices remain dramatically higher than at the start of 2022.
Many – if not all – Irish households will spend at least €1,000 more on groceries over the next 12 months compared to 2020, with the chances of prices falling to pre-crisis levels even longer term put at zero.
This means the era of cheap food is gone for the foreseeable future.
The recent easing in the rate of increases for some food products has been driven by retailers passing on the impact of lower energy and transportation costs but retailers here remain under intense pressure.
Earlier this summer, an investigation by the Competition and Consumer Protection Commission (CCPC) largely exonerated the Irish grocery sector of claims that it was artificially inflating prices here to maximise profit. The CCPC investigation was carried out following a request of the Minister for Enterprise, Simon Coveney, amid allegations of “greedflation” and calls for supermarkets to lower prices more quickly.
The analysis found no evidence of excessive supermarket price increases by supermarkets operating in Ireland and noted the rate of food inflation here had been the lowest in the EU in recent years. Across the EU, grocery prices have climbed by an average of close to 30 per cent, whereas prices in Ireland are up around half of that average.
But retailers and their pricing models are only part of the puzzle. The giant multinationals that stock so many of Ireland’s supermarket shelves make up a considerably larger part of it. The good – if that is not too strong a word – news is that Kerry Group, Nestlé, Danone and others have suggested we have reached something of a temporary peak in food price inflation.
This is obviously welcome news for Irish consumers but it would be a mistake to think this means the savage price hikes imposed over the past 18 months will be reversed. The very best we might be able to hope for over the next five years will be grocery price inflation closer to 3 per cent as we face into a very uncertain future which will see ongoing geopolitical unrest and the unfolding consequences of climate change and more unpredictable and extreme weather patterns.
Five tips to take control of your shopping bills
1. Become a supermarket ninja and only buy why you need. Do not get swept off your feet by special offers and jack hammers in the middle aisles.
2. Be wary of two-for-one or buy-one-get-one-free offers dangled before you.
3. Before you walk through the supermarket doors do your homework. Survey what you have in your cupboards and your freezer and then make a list based on that and what you plan to eat for the next seven days. Email the list to yourself, then as each item is added to your trolley delete it from the list. Buy nothing else. Trust us, this works.
4. Never shop hungry. We have said it before and we will say it again. A hungry shopper is never ninja-like.
5. Experiment more with own-brand products. While Irish consumers have increased the percentage of generic supermarket shopping from less than 10 per cent little over a decade ago, to around 40 per cent today, we are still a long way adrift of other countries. Making some smart switches could see the cost of your weekly shop fall by 20 per cent. Not all of it is great – we’re looking at you, cornflakes and cola – but there will be things on the shelves that are not branded which are as good – if not better – than familiar brands you throw in your trolley without thinking. Own-brand Mayonnaise for instance, costs half the price of branded mayo and you might not be able to tell the difference.
Have you got personal finance questions you would like to see us address? You can contact us at OnTheMoney@irishtimes.com. You can read last week’s On The Money here: Can your pension be too big and how could this cost you dearly?
