THE ABOLITION of the Groceries Order has not succeeded in reducing food prices, Minister for Enterprise and Employment Micheál Martin has conceded.
The result of abolishing the order was "not the one anticipated", Mr Martin told a seminar organised by the EU Commission yesterday. He blamed external factors such as increasing commodity prices for driving food inflation.
Two years after the abolition of the order, which banned below-cost invoicing, inflation for food items formerly covered by the order is running higher than for goods not covered by the order, the latest figures from the Central Statistics Office show.
At the time it was abolished, in March 2006, Mr Martin said the order was keeping prices high and was anti-competitive.
There were widespread expectations that prices would fall, as large retailers passed on the benefits of bulk discounting to their customers.
While the prices of processed food items previously covered by the order did fall slightly for a period after abolition, the trend now is very much in the opposite direction. Inflation for these items was 6.3 per cent in the 12 months to January, compared to just 1.9 per cent for items not covered by the order, such as fresh food.
Cumulatively, prices for products previously covered by the order have risen by 5.3 per cent since abolition, compared to 4.5 per cent for items that weren't covered by the order.
RGDATA, the umbrella group for smaller retailers, said the figures showed that it was right to oppose the abolition of the order.
"The likes of the Competition Authority and Eddie Hobbs told consumers they would save hundreds of euros, yet the reality is that the factors with the biggest impact on food prices are outside the control of Irish retailers," said RGDATA chief executive Tara Buckley.
Mr Martin blamed rising food prices on a number of factors, including increasing commodity prices, the expanding use of agricultural land to grow biofuels instead of food crops, and adverse weather conditions in various parts of the world.