Tag Archives | price decreases

Tesco price cuts – is it all good?

Diarmuid MacShane

May, 2009

Diarmuid MacShane

Tesco Price Cuts

We’ll all have been delighted to hear this week that Tesco have dropped their prices in stores close to the border. In 11 of these stores, prices will have dropped by 22% on average – permanently according to Tesco themselves.

It’s just a pity that Tesco haven’t done the same across all their Irish stores.

But then again, most of the Irish Tesco stores weren’t losing business to Asda and Sainsburys in Newry and other Northern Irish towns.

So, when you hear Tesco telling us that they’re dropping their prices in the interests of the Irish consumer, you should really know that it’s because those 11 stores were losing huge amounts of business – and as I’ve always said should happen, when business start losing money, they’ll either drop their prices to attract customers back, or else they’ll close down.

Many stores have closed down recently, so it’s good to see Tesco trying something else.

My only concern now is that we’re unlikely to see these price cuts implemented across the country – unless we consumers use our buying power to let them know we’re not happy with the prices their charging everywhere, and not just close to the border.

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Why is the price of petrol falling?

During the late spring and summer of 2008 as petrol prices were rising drastically, we were told various different reasons behind those rises. It was because of the weakness of the dollar, the increase in demand and the approach of peak oil and the impact on supply. Or all of the above, or some of the above.

However, there were strong suspicions that a significant proportion of the rise was due to the market speculation on the part of investment banks, commodity traders and hedge funds. This article (albeit coming from a particular “angle”) cites that 60% of the rises we saw earlier in the year were due to speculation alone.

Not being a financier or an economist, I don’t know myself, and I haven’t seen any specific evidence for any of the arguments.

However, what is very noticeable is that since many of the worlds larger financial institutions have become strapped for cash because of the fallout from the “credit crunch” caused by their exposure to sub-prime mortgages, we’ve seen a significant decline in the price of oil.

In fact, we’ve actually seen a decline of about 60%. Spooky!

Do the oil speculators from late spring and summer now have no more spare cash to play with on the oil commodity markets, and thereby causing the price to drop?

Did they in fact try to manipulate/speculate on the oil commodity markets earlier in the year in an effort to actually bring in some extra cash quickly to cover the hole in their finances that they saw coming because of the sub-prime problems?

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Inflation? What inflation?

According to the Times of London, there are certain things (in the UK at least) that have decreased in price in the last 12 months.

Their article, with some examples, is available here. These are the top 10 –

1. Mobile Phones: down 51%
2. Digital Cameras: down 50%
3. Flat screen TVs: down 40%
4. Home Cinema: down 36%
5. Apple MP3 Players: down 35%
6. DVD Players: down 33%
7. Fridges: down 30%
8. Camcorders: down 21%
9. Washing machines: down 18%
10. Dishwashers: down 10%

I don’t have any numbers to back this up, but I have a feeling that these price drops are also being experienced here also.

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Petrol Price comparison – update

Back in February, we started some analysis (to the end of January) of the price movement trends for the price of a barrel of oil compared to the average recorded price of a litre of petrol as reported by The AA every month.

This I have now updated for the month of February. The average price of a barrel of oil increased over the month (by about $3.50) while the average price of a litre of petrol in Ireland decreased (by 2c).

It’ll be interesting to see how things move for March given the increases in the cost of a barrel of oil over the past couple of weeks.

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Fall in house prices crisis? What crisis?

Hey – Irish Times, you and your www.myhome.ie employees may not be able to read this having firmly inserted your heads in the sand, your recent efforts to stifle the flow of information regarding house prices on your website are ridiculous.

As reported here, and here, www.myhome.ie have changed their web development to display house prices as images, rather than as text.

This is now preventing excellent analysis of the falling asking prices for houses which used to be reported weekly on Trees don’t grow to the sky.

So, house prices are falling, everyone knows house prices are falling, but www.myhome.ie seem to think that by preventing any reporting of that fact that the opposite might actually become true and the general public might not find out. But hang on, aren’t these the people who’re selling the houses, and who can actually see on a daily basis that house asking prices are falling.

While I appreciate that this information on www.myhome.ie is proprietary information, the only positive thing about their action is if they’re going to publish their own reporting on the falling asking prices for houses. If they don’t, and if daft.ie follow the same course of action, it absolutely stinks!!!

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Good and bad news from the ESB this weekend

Firstly, as we have updated in our Overcharging Ireland article, according to the Sunday Independent today (here) the ESB have been possibly overcharging up to 50,000 of their customers. The ESB has refused so far to refund these customers many of whom may have been overcharged through the estimated billing process. There is no indication of the possible amounts involved.

According to the paper – “The overcharge arises when the customer pays the bill that reflects the exact number of units used. The ESB charges any customer whose bill runs over a tariff hike date for all the excess units at the latest, higher unit rate, rather than at the rate at the time when the electricity was used.”

Secondly, on the positive side, according to the Sunday Business Post the ESB will be reducing their prices by up to 6% from November 1st. According to the paper, “The Commission for Energy Regulation (CER) is expected to announce the price cut early this week. It will be welcomed by the firm’s 1.9million domestic householders and business who have been bearing the brunt of rising costs in the energy sector.”

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Price of gas to fall… finally!!!

There’s a press release going around today which is mentioned in much of the press regarding the announcement from the Commission for Energy Regulation that gas prices are to drop by 10%.

The press release is available on the CER website here.

Rather than the headline first paragraph, I’m more interested in paragraph 4 which states that “the Commission has reduced the standing charge which will be paid by the average customer from €308.58 per annum to €56.75per annum”.

How come this isn’t making the headlines? For years, it’s been killing me that I have to pay such an enormous standing charge on a very small usage of gas. As put by the CER:

“This will encourage greater energy efficiency as a larger proportion of customer bills will be unit costs, which relate directly to consumption levels. This way a customer also has greater control over the final level of the bill. Lower usage customers may if they wish avail of a tariff that has no standing charge.”

So, while the unit price of gas may go up for gas customers who avail of the tariff without the standing charge, they will really be only then paying for what they use, rather than this large standing charge which they have no control over.I for one think this is a great advancement. I wait in anticipation to see what the new rates will be in detail, and will most likely be moving to the tariff without the standing charge as soon as I can.

Now, can we please have the same for electricity (remove the standing charge there) and road usage (remove the road tax standing charge, and put more tax on petrol) so that we can more move to “pay per use” and put control of costs in the hands of the users themselves?

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