Dáil Éireann debate -
Thursday, 8 May 2003

Vol. 566 No. 2

Ceisteanna – Questions. - Inflation Rate.

Kathleen Lynch

Question:

5 Ms Lynch asked the Tánaiste and Minister for Enterprise, Trade and Employment if her attention has been drawn to recent figures from the CSO which showed that while wholesale food prices at factory level have fallen by almost 5% in the past 12 months, consumers are being charged almost 3% more in the shops; if she has asked the retail sector to explain or justify this pattern; the action she intends to take to prevent consumers from being exploited in this way; and if she will make a statement on the matter. [12534/03]

Ms Harney:

I have noted the movements in the recently published consumer price index and wholesale price index to which Deputy Lynch refers. The wholesale food price index is heavily influenced by commodity exports which may not be important elements in the purchases of Irish retailers. Furthermore, wholesale prices of goods supplied to retailers are only one component of the final retail price. It may be that movements in other components of cost at retail level are responsible for the apparent divergence between wholesale and retail food prices. While these statistics are not evidence that consumers are being exploited, we need to examine carefully the barriers to competition in the retail sector. I have requested my Department to pursue this as a matter of urgency and make appropriate recommendations. The Competition Authority will no doubt take into consideration these developments in its ongoing competition enforcement work.

Ms Lynch:

When talking about how consumers in this country are being ripped off it is very difficult to know where to start because they are being ripped off by so many people. The main culprit since last May or June has been the Government. Within the elements in the consumer price index, fish, which should be part of our everyday diet, decreased at the processing stage by 4% and increased at the retail end by 7%. This means an overall increase of almost 12%.

The Government met on 6 May because it suddenly dawned on it that the average person was being ripped off at such a rate that it should now be a priority. I listened earlier to the Minister for Communications, the Marine and Natural Resources, Deputy Dermot Ahern, being interviewed about this issue on a local radio station. He said that, as a result of the meeting on 6 May, the Government was about to introduce a major initiative on inflation. While that may not come as a surprise to the Government, it came as a surprise to me.

An Leas-Cheann Comhairle:

The Deputy should put a question.

Ms Lynch:

What immediate steps does the Tánaiste intend to take in order to try to protect consumers in some way? The majority of people are on fixed incomes and know at the start of the year what wage increases they will get. However, they are subjected to these types of increases on a weekly basis.

Ms Harney:

As the Deputy is aware, a number of factors – some of which, such as exchange rates and interest rates, are external – affect inflation in Ireland.

Mr. Eamon Ryan:

Interest rates keep coming down.

Ms Harney:

And so has inflation, to 4.3%.

Mr. Hogan:

That is thanks to the euro.

Ms Harney:

The most effective way of dealing with inflationary pressures in any market is through enhanced competition and consumers shopping around. There is a huge divergence between the prices people pay for petrol between different areas. However, we may now be so affluent that we have become insensitive to the prices we pay. The same happens in the licensed trade. In an economy where wages are rising and where those wage increases have to be matched by productivity and performance improvements, the tool available to Government is competition policy. Where there are barriers remaining in this economy, the Government is of the view that we must act decisively to remove those barriers with a view to enhancing competition.

Mr. Hogan:

People in Kilkenny will not go to Tipperary to buy their petrol.

Ms Lynch:

There are many issues that impact on inflation. In this instance it is not about competition. More than any other country that I have ever visited, Ireland has a glut of supermarkets. The difficulty is that there is very little difference between them in terms of the prices they charge. The Minister mentioned exchange rates and external effects. I am inundated with complaints about the sterling to euro conversion and the price of magazines. However, the Office of the Director of Consumer Affairs is excluded from investigating this area. On the other hand, the only importers of magazines from the UK into Ireland are Easons and News Brothers. This matter has not been referred to the Competition Authority, which intrigues me. That is something the Tánaiste could do immediately and it would have great effect because people are clearly being ripped off. We probably buy more magazines, either for our children or ourselves, than any other country in the EU. The Tánaiste needs to do something because the average person is finding it impossible to live.

Ms Harney:

Referring matters to the Competition Authority is not solely my responsibility. If the Deputy feels there is any rip off, she has the right to refer such matters to the Competition Authority. People do so all the time.

Mr. Howlin:

The Tánaiste would have more clout.

Ms Harney:

The authority operates professionally and independently. The same applies to newspapers, for which we pay much more than people who live on the neighbouring island and we are all aware of why that is the case. Generally speaking, in either a small market or a large market, competition drives down prices. That is aviation prices are currently cheaper than they were 15 years ago. For example, it is considerably cheaper to travel to London now than it was 15 years ago before competition was introduced. Competition in other sectors will have the same impact.

Ms Lynch:

Competition has not done it for food.