Consumers take another hit as cost of groceries rises


Consumers under pressure are starting to shop more for their groceries as they feel the continued impact of rising inflation on their personal finances.

This morning’s figures from research group Kantar show grocery inflation hit 1.7% in the 12 weeks to January 23 – the highest level since October 2020.

And there was also a slight drop in the number of products on sale in supermarkets, with a 3% drop last month compared to January last year.
“We are already seeing evidence that people are starting to shop at different retailers to try and find the best price for their weekly store,” said Emer Healy, retail analyst at Kantar.

Households have seen the costs of a range of goods and services, including electricity, fuel and food, rise significantly in recent months. Prices here were 5% higher in January than a year earlier, and up 5.7% in December.

However, the increase recorded last month compares to a month last year when the country was in lockdown.

Kantar’s latest figures also show how busier households as the pandemic wanes are opting for convenience as schedules fill up.

“We can see the impact of these busier social calendars in people’s baskets,” Ms Healy said.

“Many consumers have turned to convenience options as they juggle new routines, with an additional €14.5 million spent on refrigerated convenience this time.”

Online grocery sales — which have surged during the pandemic — have also continued to pick up steam.

Kantar noted that online grocery sales spent an additional 5.4 million euros last month, up 3.8% from the same month last year.

Last month, which some shoppers consider a “dry January”, 7.6% of Irish households bought soft drinks.

“Soft drinks are seeing very strong growth and this is set to continue following the introduction of a minimum unit price in Ireland,” Ms Healy predicted.

In the 12 weeks to January 23, Dunnes Stores maintained its position as Ireland’s largest grocery retailer, with a market share of 23.1pc. SuperValu had 22.2pc and Tesco had 22.1pc.
Lidl held 11.8% of the market and Aldi 11.6%.

Kantar measures market share by the value of goods sold, rather than by volume.

Finance Minister Paschal Donohoe told the Dail in a written response last week that while Ireland applies a zero rate of VAT on basic groceries, other groceries are charged at 13.5 or 23pc .

EU States may continue to apply a zero or very low rate of VAT on goods and services where this VAT rate was in force on 1 January 1991. However, the scope of this derogation cannot be extended, he pointed out.

Under a further derogation, Ireland applies the 13.5% rate of VAT on the supply of fuel, gas, oil and electricity services to domestic and commercial users. According to EU rules, the rate cannot be reduced below 12 pc.

Fuel, including petrol and diesel, is subject to a VAT rate of 23%, which under EU rules cannot be reduced.


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