Retail Ireland Media Note on Grocery Inflation, July 2025

Overview: Retail Ireland and its members remain firmly committed to delivering value and choice for consumers, and to maintaining a fair, efficient, and competitive grocery retail sector. Although pricing decisions rest with individual retailers, the high level of competition in the Irish market continues to deliver strong value for consumers. Despite an increase in inflationary pressures in some categories over recent months, Irish food inflation trends remains below the EU average. A 2023 report by the Competition and Consumer Protection Commission (CCPC) confirmed that the Irish grocery market remains highly competitive. Margins in grocery retail are low and recent price increases are overwhelmingly due to cost increases further up the supply chain.

Background:

1. Recent Drivers of Grocery Price Increases

While global input cost inflation began to ease in late 2023, new inflationary pressures have emerged in recent months, affecting a range of grocery categories. Key drivers include:

• Rising Irish farm-gate prices: In the 12 months to April 2025, the Irish Agricultural Output Price Index rose by 23.5%. The most significant price increase in the 12 months to April 2025 were in Cattle (+48.9%), Milk (+18.7%), and Eggs (+4.1%).
• Higher global commodity prices: A combination of higher global demand and reduced export volumes drove up the price of key inputs including wheat, sugar, and cocoa, increasing costs for baked goods, confectionery, and packaged foods.
• Adverse weather events: Poor harvests across southern Europe, particularly in Spain and Italy, led to significant supply shortages and sharp price rises for key staples such as olive oil, tomatoes, and fresh produce
• Energy cost rebounds: Wholesale gas and electricity prices spiked again during winter 2024 due to supply constraints in Europe. These increases impacted food processing, refrigeration, and transport costs.
• Employment and regulatory costs: Significant employment cost increases over recent years and rising insurance premiums have added significantly to retailers’ operating costs.
• Packaging and logistics costs: Ongoing supply chain issues, including container shortages and port delays, have kept certain costs elevated.

2. CCPC 2023 Report Confirms Market is Competitive and Well-Functioning

In June 2023, the Department of Enterprise, Trade and Employment published a report by the Competition and Consumer Protection Commission (CCPC) titled A High-Level Analysis of the Irish Grocery Retail Sector. The report was commissioned in response to heightened political and media scrutiny of grocery pricing. Key conclusions included:

• No evidence of excessive pricing or market failure
• Improving competition over time, benefiting consumers
• Modest profit margins in grocery retail, especially compared to other sectors
• Structural cost challenges in Ireland, including a small population, geographic remoteness, and high legal, insurance and logistics costs
• International evidence does not support price controls; such interventions can distort markets and harm consumers

This report remains the most authoritative and independent assessment of the grocery sector, confirming that retailers are not the primary drivers of inflation and that the Irish market remains robust, competitive, and consumer-focused.

3. Irish Food Inflation Trends Remain Below EU Average

Despite recent upward pressure, food inflation trends in Ireland remain below the EU27 and Eurozone averages over recent years. This reflects both the competitive structure of the sector and retailers’ ongoing efforts to shield consumers from the worst effects of global price shocks.

Sources: Eurostat HICP (Harmonised Index of Consumer Prices)

4. Financial Reporting Requirements

Retailers in Ireland are fully compliant with all relevant Irish and EU financial reporting obligations. Many large grocery retailers operate on a cross-border basis and are part of wider international groups. This can result in differences in how operations are structured and reported, for example, through separate entities for distribution, property, or retail activity. Additionally, companies may incorporate a number of different businesses operating in the Irish market under a single group structure, which also affects how financial results are consolidated and reported.

Importantly, as stated above, the 2023 CCPC report, A High-Level Analysis of the Irish Grocery Retail Sector, directly addressed the issue of profitability in the sector. It concluded that:

• There is no evidence of excessive pricing or market failure in the grocery sector.
• Profit margins are modest, particularly when compared with other industries.
• Margins in the sector contracted during the initial period of inflation in 2022–2023, as retailers sought to absorb upstream cost increases and limit consumer price shocks.
• Available financial data does not indicate abnormally high profits in the grocery retail sector.

This independent assessment reinforces what retailers have consistently stated: that the market is highly competitive, profit margins are tight, and pricing decisions are primarily shaped by external cost pressures. The financial information in the public domain confirms that Irish grocery retailers are not earning abnormal profits, and are operating in full compliance with legal and regulatory standards.