Despite deflationary prices, Sweden still has some of the highest food prices in the Nordic area
Monday, 29 July 2013
Sweden is having a sort of deflationary price system now with inflation measured at
-0.1 percent. But food prices just continues to explode and it is a boon for the food industry which sees no problem with food becoming more expensive while other goods fall in prices.
While inflation is minus zero, according to latest data from Statistics Sweden, food prices continue to rise while other goods and services are seeing their prices fall, reports the Swedish business daily, Dagens Industri.
In reality, current inflation rate is -0.1 percent. This means that consumer prices in Sweden has fallen below any lowest lever and is how in a more deflationary. In economic this is defined as a situation where more good are chasing fewer money. Thus, people are not spending less so sellers are forced to slash prices in order to attract buyers.
In recent years, declining interest rates has contributed to this downward pressure in prices. Although prices on consumer electronics have remained depressed, depressed - actually, prices of furniture and household goods have fallen in price as well as clothes and shoes.
However, food prices are showing the opposite direction with prices there increasing by stride not steps. The industry defends the rise by saying that the market is special.
"I do not think we have such large price increases, "said Anne
Rhenman Eklund, Communications directors at Axfood. Sweden when
compared to the Nordic countries has the lowest food price rates. She
does not believe either that it is possible to compare operations
around the food sector to those of electronics for example.
"There are different pricing mechanisms behind these product categories, "says Anne Rhenman Eklund.
Food prices in Sweden have gone up 2.6 percent last year. Anne Rhenman Eklund believes it for the whole year to reach a lower number.
"We forecast 1.5 percent, max 2 per cent, rise in food prices this year, it is not much," she said
Different groups of the food are affected by various factors. The price of fruit and vegetable goes in waves. It depends on supply and harvests.
Meat has gone up 4.8 percent more expensive, fish 4.3 percent more expensive in recent years. Fruit has become 3.9 percent more expensive.
Åke Gustafsson, economist of Swedbank thinks that fruits and vegetables are affected by a lousy spring, which pressed up prices. He also feels that it is also caused by the volatility of the market - the tendency where by prices moves much up and down. This is generally associated with commodity-related products.
However, Thomas Svaton, president of the trade organization, Swedish Retail, do not share the above assessment. He suggests that price pressures still exist in the industry. And this began earlier with discounters like Lidl and Netto when they entered the Swedish market around 2003.
"The price pressure has not stopped, "said Thomas Svaton.
by Scancomark.com Team