WRITTEN QUESTION E-1977/02

by John Cushnahan (PPE-DE) to the Commission

(8 July 2002)

Subject: Price disparities

Is the Commission aware that according to a survey carried out by Retail Intelligence, consumers in the Republic of Ireland are paying more for their groceries in comparison to other European states?

A shopping trolley of 40 items of food and drink in the Irish Republic cost EUR 296,31 compared with EUR 232,82 in St Tropez located in the south of France. Irish consumers are therefore paying 27 % more for the same items.

Could the Commission investigate why such disparities exist and what measures the Commission will take to ensure the Irish consumers are not being ripped off.

Answer given by Mr Solbes Mira on behalf of the Commission

(16 September 2002)

According to Eurostat's preliminary purchasing power parity (PPP) data for the year 2000, which will shortly be published, Ireland is on the aggregated level only about 6 % more expensive than France (private final consumption expenditure).

For food and non-alcoholic beverages the price difference is 3 % (Ireland more expensive).

The difference between this figure and the figure of 23 % according to the Retail Intelligence report to which the Honourable Member refers is due to the way in which this study was carried out.

Eurostat, with the support of the Central Statistics Office of Ireland, has analysed the Retail Intelligence report, and has the following reservations:

1. The prices were collected only in Dublin and St. Tropez. These places are unlikely to be representative of the two countries.

2. The prices were collected in only one retail outlet in each country. Price collection, however, should be done in a representative sample of all retail outlets.

3. The basket of 40 goods is much too small to represent the full private household consumption expenditure pattern of a country. The comparable and representative basket used in the official data co-ordinated by Eurostat includes over 500 food and drink items alone. Furthermore, the weights in the basket chosen by Retail Intelligence are unrepresentative of Irish consumption patterns. For example, the basket includes expenditure of about 41 % on food and non-alcoholic beverages and about 44 % on alcoholic beverages. Actual Irish private household expenditure on these categories are about 14 % and 3 % respectively.

Generally, when comparing individual items in specific shop local demand and supply conditions can lead to large price differences across countries and sometimes even inside countries. However, when a larger basket is compared and local expenditure patterns are taken into account the price differences across countries are usually much smaller.

4. The high share of alcohol in the basket about 15 times more than the average private household spent on it in Ireland is a main reason for the overstated price difference between France and Ireland, as alcohol is considerably more expensive in Ireland than in France, due especially to differences in taxes and duties.

The price difference between Ireland and France in Eurostat's PPP data has been supported by a pilotproject last year using electronic data from supermarkets to compare prices of individual brands across countries. Although this study does not ensure representativity of the basket compared it ensures a very high degree of comparability by focusing on well known international brands available throughout the union. Information from this study has been published in Consumers in Europe from Eurostat and in the Internal Market Scoreboard No 10.