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Grocery Price Cuts: Extra Slashes Prices on Over 150 Items

(The online newspaper): – If we look at the inflation trend in our neighboring countries, imported inflation is on the way down, while the Norwegian krone has strengthened. And here are parts of the explanation for the price cut Extra is now implementing, writes Håvard Jensen, chain manager for Extra, in a message to Nettavisen.

Price growth both in Norway and abroad has been sky high in recent years, both as a result of the Ukraine war, the aftermath of the corona pandemic and other reasons. Nettavisen has previously mentioned that pasta and cooking oil are products that will increase in price in the winter of 2022, among other things as a result of the war in Ukraine.

New direction

But now the arrows point in the opposite direction. The government believes, among other things, that the price increase will be only 3.8 per cent in 2024, down from 6.0 per cent in 2023. The same picture is seen globally. Among other things, the price of grain and vegetable oils worldwide has fallen sharply during the year, according to the UN’s monthly food price report.

It also means that the goods bought by Extra and other grocery chains will be cheaper. The Extra manager says that the lower purchase prices are passed on to customers in the form of price cuts.

The prices of over 150 items are cut by up to 49 per cent. This includes goods such as:

o Maisolje: -49%

o Spaghetti: – 38%

o Farris: -28%

o Stabbed mackerel in tomato: -23%

o Lano Shower soap: -20%

o Tortilla Chips: -19%

However, certain goods are only cut by as little as 1 or 2 percent. See the full overview here:

River pristak

Extra states at the same time that the price ceiling will be demolished. 1.5 years ago, Extra launched so-called price caps on popular items. This means that the prices of the selected goods should remain the same price or lower. It is intended as a guarantee for customers, and was also practiced by Kiwi and Rema, but the scheme has also been criticized for being a marketing ploy.

– There will still be uncertainty about the price trend going forward, but the underlying cost trend means that the price cap will not be as relevant to consumers as it was in the autumn of 2022. When the price cap was established, customers felt it was an important and correct measure. That effect has largely disappeared, and customers are more concerned with campaigns and offers, writes Jensen.

They are thus going in the exact opposite direction to Rema, who just before the New Year announced that they were putting a price ceiling on 1,000 items, according to E24.

Currency and macro expert Dane Cekov at Nordea Markets believes that Extra’s initiative is very positive. He expects that such price cuts will in themselves contribute to newd the rise in prices in society.

– Grocery prices are as much as 13 per cent of the consumer price index, so it has something to say when the big food chains cut prices or start a price war. What we usually see is that when one of the chains does this, the others follow suit, so I would think Kiwi and Rema throw themselves at the price cuts, says Cekov.

Interest rate cut

Together, the three low-price chains Kiwi, Rema and Extra have over 70 per cent of the grocery market, and dominate in total.

– Price cuts are good news for Norwegian households, for price growth and for Norges Bank, and can contribute to us getting an interest rate cut as early as 2024, says Cekov.

He has already initially estimated lower price growth throughout the year, but believes it will take longer to affect other parts of the merchandise trade.

– If you look at chains such as Elkjøp and XXL, they order their goods a long time in advance, so lower prices abroad will not have an effect on prices in stores in Norway for many months. There is something else about food prices, he says.

2024-01-02 08:57:18
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