I. Summary
The price of a food basket for a family of four has increased by 1.5 per cent month-on-month. The increase in the basket over the past 6 months is 6.5 per cent, which is 3 per cent higher than the change in the Consumer Price Index over the same period. The uncertainty in the measurement is 2.5 per cent, which is due to volatility in the food market in recent weeks.
II. Basket survey
The following changes had been made to basket 1 since last September:
The weighted average increase for the basket is 6.5 per cent and the standard deviation is 2.5 per cent, as previously stated. Over this six-month period, the consumer price index has risen by 4.1 per cent. This is shown in the chart below.
Food prices have therefore risen in line with the Consumer Price Index over the past year. However, they rose little from the end of March to September 2021 (by 1.1%). The increase is 1.5 per cent since February, which is considerably more than the increase measured by Statistics Iceland in March.
III. Indexes of individual shops
Based on an ASÍ survey, indices for product prices in individual stores were calculated. The development of the internal indices for individual stores is shown below:
As can be seen in the image below, the gap between the stores has been narrowing and competition appears to have been increasing since 2019. In particular, Hagkaup and, later, Fjarðarkaup have been lowering their prices.
IV. Product shortage
There was a considerable shortage of products in the survey. On average, about 14% of the products that ASÍ was measuring were missing, and this primarily reflects different priorities in product selection. Bonus stood out, with 35 of the products covered by the survey missing. Several key products were missing, such as: Myllu Home-baked Bread, a whole frozen chicken, a frozen lamb leg, Nesbú Happy Eggs, Frón milk biscuits and green grapes. An overview of the product shortages can be seen in the table below:
The survey was conducted at the Bónus in Selfoss, so it is not certain that it reflects the product range in all stores.
Bónus stores.
V. Easter eggs have dropped in price
The Icelandic Consumer Association (ASÍ) surveyed the prices of Easter eggs. In total, the prices of 15 eggs that were also on sale last year were checked. The survey shows that most shops have, on average, lowered the prices of
Easter eggs. The change varies between shops:
VI. Comments
In the notes accompanying the ASÍ survey, the main emphasis is placed on the difference between the highest and lowest product prices. This method does not measure the actual price difference between shops. The following table is provided:
This table is misleading. A consumer reading it might therefore think that the price difference between Fjarðarkaup and Bónus is generally (20.0-2.8) = 17.2%. This is far from the truth. The truth is that the difference is around 6% – 7.5% and has been more or less that in all of Ásís price surveys over the past 3 years, as the accompanying graph shows:
To better understand this, it is useful to consider the accompanying box plot for the survey:
The figure shows that the difference between the median is about 6% and the means is about 7.5%. The difference between the measurements is due to considerable volatility in Fjardarkaupa's pricing. The metric that Asi uses for interpretation can thus more than double the difference that actually exists between the median and the average price in the stores.
VII. Shopping baskets
Veritabus publishes monthly changes to a standard basket of branded goods. However, no distinction is made for essential products such as Andrax and Lamba toilet paper. A second basket is being developed, which will be based on the cheapest option in each product category. It is hoped that this basket can be launched this autumn.
VIII. On Veritabus and the price survey
Veritabus is a sister company of the Arev securities firm. All Veritabus price surveys, as well as other public price surveys, can be found on the Veritabus website for subscribers.
The ASÍ price survey examined the prices of 165 items. Of these, 30 were Easter eggs. About half of them were also in the ASÍ survey a year ago.