News

May 03, 2023

Tesco Ireland slashes cost of more than 700 items, kicking off grocery price war

Tesco will cut prices on hundreds of products, with other retailers saying they

Tesco will cut prices on hundreds of products, with other retailers saying they are now reviewing their prices

Tesco's decision to cut prices comes as grocery-price inflation has reached record levels. Photo: Julien Behal

Households are to get some relief from soaring grocery prices as the supermarkets price war moves up a gear.

Tesco will cut prices on hundreds of products, with other retailers saying they are now reviewing their prices.

Tesco is reducing prices by an average of 10pc across more than 700 products, the Irish Independent has learned.

One major retailer is reducing prices by an average of 10pc across more than 700 products

Its price-cutting is sure to force a response from rivals Dunnes Stores, SuperValu, Lidl and Aldi.

The price reductions represent a step up on the recent cuts to the price of own-brand bread, butter and milk announced by the main supermarket chains.

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The decision to reduce prices across a range of goods comes as grocery-price inflation has reached record levels.

Research firm Kantar said prices rose by 16.5pc in the 12 weeks to May 14 compared with the same period last year.

It means a typical family will pay an extra €1,200 if they do not make changes to what goes into their shopping trolley.

Rising food prices have become a major concern for households, with a recent An Post Money survey finding six out of 10 people are worried about grocery bills.

Up to now, supermarkets have battled to maintain their market share by cutting the cost of dairy products and bread.​

The items going down in price include grocery staples and health and beauty products.

The range of goods that will be cheaper vary from oven chips to toothpaste to pizza and toilet rolls.

Only one-third of the goods whose prices are being cut by Tesco are own-brand products.

There is a price cut of 50c on Pampers Active Fit Size 4 Essential Pack (37 nappies) that will bring the price down to €9.50. Flahavan's Progress Oats (1kg) are being reduced by 14c to €2.35.

Pro-formula Sensitive Toothpaste is coming down by 75c to €1.25, while Tesco sweet potato oven chips (500g) will be reduced by €1.11 to €2.19.

Tesco said its price cuts were part of a wider commitment to give customers value on their shopping and would complement its other value offerings such as price-matching some of Aldi's goods and special deals via Clubcard.

Tesco Ireland commercial director Joe Manning said: "We’re working hard to invest in helping families by cutting prices on hundreds of products.

"Committing to discounts across a hugely diverse range of items including grocery staples, household products and family favourites demonstrates our continued commitment to offering great value and means customers can expect to find savings in almost every aisle in store or online."

Mr Manning said Tesco was working closely with its suppliers to manage their input inflation and their cost-price pressures.

"As our costs are reducing from our suppliers, we are now able to pass those savings on to our customers," he said.

His comment is likely to raise questions from farmers who are concerned they will end up having their margins reduced every time the prices of food items are cut.

Rising grocery prices have become such an issue they have prompted calls for a cap on some staples.

Louth Labour TD Ged Nash said there was mounting evidence across Europe that food inflation was now "extremely sticky".

He highlighted UK prime minister Rishi Sunak's plan to encourage caps on the cost of basics such as bread and milk to help tackle the cost-of-living crisis.

Mr Nash said supermarkets could be "playing catch-up" in terms of lost profits after the Russian invasion of Ukraine, but he called for better understanding of the facts.

The call comes after Fine Gael was privately warned that food-price inflation will go "through the roof" as a result of tighter environmental rules for farmers that threaten food production.

The warning, from former Irish Farmers’ Association president Eddie Downey, was issued earlier this month in a presentation to a private Fine Gael meeting.

It came not long after junior retail minister Neale Richmond failed to secure a commitment from supermarkets to reduce grocery prices.

Mr Downey, who also chairs an internal Fine Gael forum on agriculture, told party TDs and senators of increasing concern among farmers about the effects of nitrates banding.

On Thursday morning, Finance Minister Michael McGrath welcomed the move by Tesco.

"These reductions are very good news for consumers, and I think it will be warmly welcomed," he said on RTÉ Radio 1's Morning Ireland. "Everybody has seen the really significant spike in prices over the last 18 months or so. This could be a significant turning point in relation to grocery prices for consumers.

"We know that people are very price sensitive, they will shop around, and they will vote with their feet. I would expect that other significant retail providers in the grocery space will respond. But that's a matter for themselves but people certainly will respond to good offers, and I think will adjust their shopping pattern accordingly."

He said that when input costs fall, the Government expects retailers to pass on the benefit to consumers.

He added: "So, this is potentially quite a significant turning point given the number of products that are now going to benefit from this reduction and given the market forces that are there and the price sensitivity of consumers I think it's only a matter of time before other grocery providers respond."