In January and February, food prices rose significantly. But in March, the increase stopped at 0.1 percent, according to new figures from the Food Price Monitor.
Finally, says Ulf Mazur, CEO and founder of the Food Price Monitor, who sees an explanation:
The increased pressure from consumers forces Ica to act to avoid losing sales volume, which means that Willys and Lidl in turn are forced to lower their prices.
According to Mazur, the process from announced price increases from producers to new prices being marked in stores takes several months. Many adjustments in stores are made in January and February.
Willys is the chain that usually adjusts its prices the fastest, which happens centrally with a button click. Ica is usually last – but now something has happened.
Fighting over prices
When Ica lags behind, Willys must lower its prices again to keep its promise of having the cheapest food basket, and that's what has happened. They're starting to fight over prices, says Ulf Mazur.
The Food Price Monitor's assessment is that the price development in March has to do with a changed purchasing behavior over time and increased competition for customers.
When prices have risen, customers have become multiloyal and started shopping in more different stores than before. It's clearly affecting Ica, which must find a strategy to handle it, he says.
This means that they're holding back on their pricing. But also that they're working with campaigns, "clips" and multi-price offers to maintain sales volumes.
Meat stands out
Mazur believes that the other chains will adapt now, but how the development will continue is hard to predict.
It remains to be seen if this will escalate and the answer to that will come later, he says.
Even though the price increase was lower than expected in March, there is one product category that stands out according to the Food Price Monitor – meat – where demand exceeds supply.
Consumers want more meat again, after the vegetarian trend that has been going on for several years. Moreover, dairy farmers are getting well paid for milk, which means that they're delaying the slaughter of older animals that produce milk, says Mazur.
He means that on the price reduction side, it's fruit and vegetables that stand out, which is normal for the season, as well as olive oil, which has also become cheaper.
March: +0.1 percent
The last six months: +2.8 percent
The last twelve months: +3.8 percent
Since January 1, 2022: +28.5 percent
The Food Price Monitor investigates what the regular price is for an item in a store on the last day of a certain month and compares it with previous times.
Source: Food Price Monitor
