– Difficult to explain – E24

At the same time that prices in the industry are falling, food continues to rise for you and me. Industry veteran Ivar Petersen wonders whether grocery chains have had a false start.

Food and non-alcoholic beverage prices rose 0.9 percent in May. Last year, prices rose by 5.4 percent.

Industry veteran Ivar Petersen, who has studied for several years the interplay of prices in the food and beverage value chain, also notes another number.

For one step back in this process, in the food industry, prices rise significantly.

There, statistics from Statistics Norway show a decline of 0.2 percent in May and an increase of just 2.6 percent last year.

– It's very special, says Petersen.

The trend has reversed

Naturally, price growth is stronger in industry than in stores.

This means that prices usually rise more among those who produce food than among those who sell it to you and me.

Grocery chains have been able to become more efficient and have seen higher productivity improvements, says Petersen.

Over the past three years, prices in the food industry have risen by 34 percent. By comparison, the grocery business rose just under 22 percent.

Last year, that flipped. And in new figures from May, the new trend has been reinforced, says the grocery expert.

– It's hard to explain.

Ivar Petersen

He worked for 18 years at Nibio and wrote a book about the Norwegian grocery business.

Special Norwegian price windows

Petersen, who has worked for 18 years at the Norwegian Institute for Bioeconomics (Nibio), allows himself to speculate a little at the same time.

He points to the government's interest in the grocery industry, including the process of how prices are formed.

Before Christmas, former Industry Minister Jan Christian Vester (AFP) received an analysis of the unique Norwegian scheme with fixed “price windows”. Traditionally, purchase prices in stores are adjusted only twice a year – February and July. The report by the Norwegian Competition Authority concluded that this may have had a negative impact on competition.

– It is possible that the chains took out the July increase in advance. But it will be just speculation until the numbers come out in August, Petersen says.

Changing practice

This time last year, Rema 1000 announced it was moving away from the practice of price windows. Instead, they will negotiate continuously.

– This means that prices largely reflect changes, both up and down, in raw material prices, for example, says Line Aarnes, category and purchasing manager at Rema 1000.

She commented that the price increases were somewhat lower than in the grocery industry. It also points to the Norwegian Competition Authority's recent report on profitability in the grocery industry.

– It shows that we only change our prices in line with our cost changes.

Rema's two biggest rivals, Norgesgruppen and Coop, are members of Virke. Grocery branch manager Benedik Solom West points out that price growth is fortunately on the way down.

– It is a positive thing for both grocery chains and consumers.

For a long time, he says, we've seen much higher profit margins with manufacturers than with grocery chains.

– In the future, we hope to also improve competition in other links in the food value chain.