The Consumers Association of Ireland has dismissed the supermarket price war as a marketing strategy to promote own-brand products which will have no effect on inflation.
Mr Dermott Jewell, chief executive of the association, said the price war was mainly focused on the supermarkets' own-brand products, which were low-cost, and would only benefit a small number of consumers.
"The problem is the price reductions are not across the board. It will benefit some consumers who are pleased to buy the own-brand products, but this is addressing a very small number. It won't have a serious effect on inflation," he said.
Mr Jewell said supermarkets were always marketing their own-brand products. The question was how the supermarkets were intending to fund the losses. If they were absorbing the loss, they were admitting they were partly fuelling inflation.
"This all gives the impression it is marketing strategy to try to get consumers to buy the lower-priced supermarket own-brand products." He said the price reductions centred almost entirely on own-brand products. The only way inflation would be affected would be if supermarkets brought down prices across the board.
Food prices had an impact on inflation figures. Consumers had noticed they had been paying more in supermarkets over the past year, he said.
A spokeswoman at Tesco, which has announced reductions in the price of 52 items, confirmed that the reductions were focused on own-brand products. However, at Superquinn, a spokeswoman said there was a mix between brand and own-brand products. The other major supermarket involved in price cuts is Dunnes.
ISME, the lobby group for smaller businesses, which includes retail and food outlets, also says that the supermarket price reductions will have no effect on inflation.
In a statement, the group denounced the reductions as a "promotional gimmick" and a further attempt to put pressure on the Government to remove the 1987 Groceries Order, which controls below-cost selling.
It said the price war would not benefit the consumer in the long run and would damage the small retailer and independently owned sector and erode the domestic opportunities.
On the move by the Competition Authority to seek the order's removal, ISME said there would be no logic to any decision to rescind the below-cost ban, other than to be seen to respond to inflationary pressures, but it would have no effect on the inflation figures, as the losses incurred by below-cost gimmicks would be recouped elsewhere. Any repeal of the order would actually decrease competition.
Yesterday, the IFA National Liquid Milk Committee chairman, Mr Donal Kelleher said the price war had nothing to do with genuine concern about inflation. It was a marketing ploy with the main retailers vying for market share in the face of competition from new discounters.