Accusations that retailers are ripping the public off by nearly €1.3 billion a year drew a sharp response yesterday from the Tánaiste who urged consumers to show a greater willingness to compare prices and shop around.

Reiterating her opposition to "Soviet-style" price freezes, Ms Harney said businesses would find it harder to charge over the odds if shoppers were prepared to use their discretion.

The Tánaiste dismissed as "unworkable" a suggestion by Fine Gael finance spokesman Mr Richard Bruton that retailers be required to display prices for the corresponding date 12 months previously.

Declining to support Mr Bruton's assertion that many traders routinely ripped off customers, Ms Harney acknowledged costs in some sectors had climbed sharply but said wage inflation and rising insurance fees were partly to blame.

The Cabinet has asked the Competition Authority to examine ways of boosting competitiveness in various industries.

But in the first instance the power to confront price rises lay with the public, insisted Ms Harney.

"People need to become more price sensitive. They need to be more willing to complain about prices.

"The prosperity of recent years has made many of us insensitive about costs. A lot of people don't even count their change."

Though pubs have been forced to display charges, the move does not seem to have encouraged drinkers to "shop around", said the Tánaiste.

Mr Bruton's focus on services sector price increases prompted a strong reaction from the Irish Hotels Federation, which described his accusations as "ill informed and one-dimensional".

It is unfair and inaccurate to lump hotels in with general retailers, the two are "not in the same" category, said federation chief executive Mr John Power.

He added: "Hotels provide a service and an experience to their customers, and are not retailers of a commodity; 60-70 per cent of any gross margin goes directly to pay the wages of the staff who deliver that service."

Ms Harney was speaking at the presentation of a report of the Expert Group on Future Skills Needs, which said more science and engineering graduates were required if the Republic was to complete the transition to a high-value, research and development based business culture.