.
Food prices go up twice a year. Here's everything you need to know about the much-talked-about 'price spike'. Going to the grocery store is expected to be much more expensive on February 1. But why will it be? How much more expensive will our basket actually be?
Below are nine questions and answers about the announced increases in food prices:
1. What is happening on February 1?
It adjusts the prices that grocery stores have to pay to suppliers, i.e. those who produce food. Tine, Nortura and Orkla are examples of large suppliers of Norwegian groceries. Suppliers adjust their prices twice a year. The second "price jumps" will take place on July 1.
2. Who decides the prices?
According to Mette Hanekamhaug, director of communications at the Food Suppliers' Association (DLF), chains such as Kiwi, Rema 1000 and Coop decide when negotiations will take place.
3. What usually happens to shelf prices in February and July?
When chains have to pay more, it means they have to increase the price for customers in order not to lose profitability.
Price growth statistics from Statistics Norway show that food and drink prices always go up in February and July. Last year, compared to the previous month, they increased by 4,5 percent. in February and by 7,6 percent. in July.
4. What determines how much prices will increase now?
The price increase, which will take place on February 1, is the result of negotiations that the chains and suppliers conducted on the eve of last year. These negotiations are called "autumn hunting".
“The negotiations are based on the price agreements that the suppliers announced in October,” says Hanekamhaug.
As a rule, this is based on increased costs for suppliers in the period after the previous price adjustment.
5. How much will prices increase now?
For competitive reasons, neither player can say exactly that.
“We know for sure that there have been reports of extraordinary cost increases for suppliers. If chains received 5-10 percent higher purchase prices, this must mean price increases for customers, says NHH Professor Øystein Foros.
“Besides, there are signs that the Christmas price war has been particularly fierce this year. In other words, the chains had lower margins than usual.
6. What does this mean for food prices for the rest of winter, spring - and this year?
It is not uncommon for prices to skyrocket on the days following February 1 and July 1. However, according to Foros, after a few weeks, it is normal for prices to start falling again.
“When food and drink prices rose 7,6% in July last year, it was natural to assume that the jump on July 1 would be much larger.
In the months leading up to subsequent price spikes, it is common for price increases to fall as a result of fierce competition between chains. Last fall, prices fell in August, October, November and December.
7. Do suppliers and chains only negotiate purchase prices?
No, during the "autumn hunt" they also plan what the cooperation will look like in the coming year. They are negotiating the range, campaigns, joint marketing and other means of sales promotion, says Hanekamhaug of DLF.
According to food expert Erik Fagerlid, in this part of the chain and suppliers have a common interest.
– The idea is that as many consumers as possible go to one of the chain stores and buy one of the supplier's products.
Negotiations could include, for example, Kiwi highlighting Pepsi Max in a certain number of TV commercials throughout the year.
