Grocery price freeze in Europe…

To combat inflation, grocery stores are capping prices on selected products. This will put pressure on suppliers to limit their price increases.

Nice idea. Those grocers will get my business. But will they get away with it? Will suppliers co-operate? If they can’t pass through cost increases will they stay in business?

You can see more lucrative deals with major buyers with price increases passed on to the little guys. Ouch to prices in the corner market or convenience stores.

If prices are artificially capped below whatever the “fair market price” is, there will be less of it. Is that enough to cause hardship? Who knows. Many of us do recall only being able to buy gasoline on odd/even days that corresponded to the car’s license plate.

Maybe the grocery stores can play games, like hold the line on one thing that’s regulated (say, eggs) and try to profit on something else (ham, bacon and sausage). Or maybe they’ll have fewer employees working…but that might already have gone as far as it can go with the availability of employees right now. Have you tried to get help in a store lately?

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The supermarket strategy has always been to keep markups low on selected items. That gives the consumer the idea that their prices are low. They make money when you do the rest of your shopping there once they get you in the store.

Price cap is an extension of that idea. Some items can be sold at a loss–as a loss leader. But usually its only low mark up.

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