Finance Minister Michael McGrath has stated that there is a “justification” for supermarkets to reduce food prices further. However, some businesses will still face rising costs. The minister’s comments come after official figures revealed that wholesale price pressures in April were still evident across a wide range of products. Despite this, wholesale energy costs have fallen, but the passing on of those benefits has been limited.

In an interview with the Irish Examiner, McGrath said that he had seen some price reductions across common household products like milk. However, grocery prices in general remain at high levels, as retailers have yet to feel the impact of falling factory gate energy prices. The finance minister acknowledged that energy prices are a significant input cost for businesses. Although they have reduced substantially at a wholesale level, the pass-through so far has been limited. McGrath believes that we will begin to see it soon.

The latest Central Statistics Office (CSO) figures show that Irish consumer price inflation was running at 7.2% in April. While there is justification for further price reductions at supermarkets, businesses are still battling hidden costs that may be causing a delay in price reductions. “Some input costs have gone down, but others are probably rising. It’s difficult for the government to get under the bonnet and see exactly the makeup of all the costs that businesses are incurring,” said McGrath.

The CSO figures show the level of wholesale prices across the economy fell 1% from March and was also lower than April last year, helped by a significant fall in wholesale electricity prices. However, the uneven picture will likely renew concerns about whether energy suppliers to householders, retailers, and merchants will pass on any month-on-month decreases from their wholesale suppliers to consumers.

The CSO said wholesale electricity prices fell 13.5% from March and were now 42.5% below prices in April last year. In food, wholesale prices were down in April for the second successive month, suggesting retail prices for food at supermarkets should be, or will soon start falling if wholesale prices are passed on. The wholesale prices of the seven of the eight food types tracked by the CSO fell in April from March, with the wholesale prices of dairy, fish, and grains falling for the third month in a row. Wholesale prices of fruit and vegetables were unchanged for the third successive month, but were almost 18% higher from April last year. Meat prices, after falling in March, rose in April, according to the figures.

The picture is more complex for building materials. The overall wholesale price level rose in the month, and materials rose 11.5% from April last year. However, while the wholesale price of ready-mixed concrete and cement blocks both rose sharply in April, many other building material prices were unchanged from March.