BY JOHN ELLIS, FINANCIAL ADVISOR
Inflation is easing they say. Consumer prices only rose by 0.5% month on month according to the figures from the Central Statistics Office (CSO) last week, the 19th straight month where the annual increase in the CPI has been at least 5.0%.
The CSO published the national average prices for April showing increases on basic foodstuffs – sugar up more than 35%, milk more than 20%, butter nearly 19% and eggs up 18% with the overall annual grocery bill up by €1,200 in the past year.
Commenting on these figures and putting a monetary value on the increases, Anthony Dawson of the CSO said: “The national average price of several items rose in April 2023. There were price increases for an 800g loaf of white sliced pan (+23c), an 800g loaf of brown sliced pan (+18c), two litres of full fat milk (+44c), and a pound of butter (+66c) when compared with April 2022.”
Along with that, the most significant increases in the year were seen in housing, water, electricity, gas and other fuels which was up 20.7% and food and non-alcoholic beverages which rose by 13.1%. Electricity up 51.3%, gas up 55.8% and then add the higher mortgage interest repayments up 41.0%. Interest rates gone from 2.92% on average in February to 3.54% for March –greater than any other European country.
There is all manner of advice flowing around in media streams from the sane to the outright bizarre. Seemingly we “love cheap” forgetting the downside and we will eat anything as we don’t care about quality. The idea is mooted that we are in an emergency situation and the market is failing and the Government should move to cap food costs.
The Government is being accused of sitting on its hands, but it has little power to command the retail sector to drop prices. Minister of State Neale Richmond called an emergency meeting of the Retail Forum last week. Nothing came of it really. In a statement Retail Ireland Director Arnold Dillon said: “The retail sector fully appreciates the concerns of customers at the high levels of food inflation. Retailers are actively working to minimise the impact on consumers of massive EU-wide commodity price increases, and this will continue. Specific pricing decisions are a matter for individual retailers, but intense competition in the sector will ensure that consumers benefit from falling commodity prices. This is happening already and will continue.”
Mr Richmond said Irish food inflation had been among the lowest in Europe in recent years with the EU average at 27% over the last two years, while Ireland was 17%. Last year average EU food inflation was 19%, while here it was 13%.
Energy and commodity costs are exacerbating the problem, Mr Richmond said. “There is a significant lag in how energy and commodity cost increases translate into consumer prices. Retailers held off increasing prices for a long as possible last year but could not absorb the massive cost increases indefinitely. We expect general inflation and food inflation to ease as we move through the year.”
Why are we in this mess? Because of everything outlined above?. Yes. But are these not just the symptoms? If we are in an emergency is it not due to a deeper problem that needs to be faced – the commodification of food?
In the abstract of the thesis ‘Food: To Feed Or To Profit” written by Emma Vandenbroeck, she says: “In the last century, food increasingly has become commodified in which it has become constructed as a mere commodity in a global food system. By putting the profit-generating capabilities of food first, the main goal of the food system lost track of its original purpose [which was] to feed the population.”
Whatever it is, a few cents off the loaf of bread and bottle of milk isn’t really going to help.’.
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