Food can get more expensive: – Everyone is afraid

Food prices have risen slightly already, but the big question is what will happen after May 1, when Kiwi’s three-month price-lock guarantee expires. Experts believe none of the chains will risk raising prices.

• Economics professor Austin Furos believes chains are afraid of being left with black pepper.
• Food expert Ivar Petersen believes that the Kiwis have tied themselves to Masta with their own price guarantee and that it will be difficult for them to raise prices “overnight”.

In any case, customers can at least soon – in all likelihood – look forward to a price war until …

We’ve put behind us the strangest winter fare of modern times. After a short year of war in Ukraine, rising prices for electricity and fuel, and soaring prices for raw materials, expectations were high that food prices would rise in the semi-annual price window of February 1st.

Prices on VG’s large food exchange rose 11 percent from September 2021 to September 2022, and experts fear an unreasonable jump in prices.

It didn’t, however, because Kiwi outsmarted the entire food industry by not fixing prices on February 1 as well as continuing to lock prices on 140 items.

It didn’t take long before Rema 1000 and Coop Kiwi caught on and a price war was under way. And it lasted until Easter this year, when I went all out with the Kvikk-Lunsj three kronor and a liter and a half of the Solo 7.10 kroner.

But now the “days of wheat bread” are over and food prices are starting to rise again. VG wrote before the weekend that some prices have now been revised after the difficult Easter price war.

What will happen after May 1?

Anyway, the “price party” continues for another week as Kiwi promises to keep price locks on 240 items until May 1. This means, for example, that a Coca-Cola Zero 1.5 liter will cost NOK 28.90 for another week.

But after May 1, it’s uncertain how much Cola Zero, Geldy Cervelat, Pla Castillo, Goodbrand brown cheese and 236 other “price lock” items will cost.

VG has contacted the country’s three major lower-price chains, but there’s not much they can say about future pricing trends.

Kiwi’s director of communications Kristin Akvag-Arvin recalls that while food prices in Sweden increased by 19.7 percent from March 2022 to March 2023, they only increased by 8.6 percent in this country. And from February to March, prices fall in Norway as a result of the kiwi Price lock guarantee Price lock guaranteeKiwi has introduced a price lock on more than 240 items for May 1, 2023. And the price war towards Easter.

– Although some prices have now been adjusted, they have increased less than what we received in terms of input price increases from suppliers, says Arvin.

Category and purchasing director Line Aarnes at Rema 1000 says they have no chance of saying anything about future prices because it would be a breach of competition law.

Here’s what the experts say:

– What will happen to food prices in the future?

– From what I’ve been able to see, prices have been holding fairly steady since February 1st. But there have already been some price increases after Easter, says Oystein Foros, professor of economics at NHH.

But he believes that once the increases were mentioned in the media last week, the price increases stopped.

Now the lower price chains are getting too cautious and stumbling upon each other.

– It is especially important that chains do not become the one that raises prices first. Everyone is afraid that black pepper will leave out, says Foros.

The possibility of revenge

Foros believes there are strong indications that the grocery chain has much lower margins. Chains “burned money” on many products this winter.

What will happen to prices after May 1?

– I think it will have to do with the price restricted Kiwi products. They can continue to lock in the price or increase the prices of these items. If they raise their prices, there is a chance a competitor will not follow suit. Herein lies an opportunity for revenge, says Voros.

But if he had to bet, he believed other chains would think twice before continuing the price war. Simply because it is very expensive.

He believes the key lies in the kiwi.

– It would greatly surprise me if any of the others increased first. I’m reasonably sure competitors are keeping a close eye on the 240 products on which Kiwi has placed price restrictions.

But for customers, there is a bright spot ahead.

– We will probably see a small price war on typical May 17 commodities in the previous week, he says.

– tied to the mast

Consultant Ivar Pettersen at Alo Analysis says that we will see a normalization of food prices, which are already starting to move up.

– It’s just as expected, he says.

– What do you think will happen to prices after May 1?

– The big question is who will assume the role of leader of the award after May 1. It is hard to see how the kiwi, as a price pusher, will take the lead in increasing prices. They tied themselves a bit to the mast, and it’s exciting to see how they get out of this,” Petersen says.

He believes that there will be a gradual upward adjustment of prices in the weeks and months leading up to the next price window.

– The next official price adjustment will come on July 1, after which there will be an even larger price increase, he says.