Sharp rise in food prices in Norway linked to lack of competition

Several everyday items in Norwegian supermarkets from sausages to milk have jumped in price this month. The Consumer Council has said that the rises are a sign of a lack of competition in the Norwegian grocery market.

A supermarket.
Norway's consumer council has said that price rises could potentially be linked to a lack of competition. Pictured is a supermarket. Photo by gemma on Unsplash

Since the beginning of February, many everyday items in supermarkets have increased by 10 percent or more, public broadcaster NRK has reported.

NRK compared prices of several items from different supermarkets before and after the turn of the month.

Beer, cheese, butter, sausages, soda, porridge oats and kitchen roll were among the household essentials to receive a price hike.

Some products, such as shrimp salad—a popular pålegg, or sandwich spread– rose in price by as much as 40 percent.

Online news site Nettavisen has also reported steep price rises in February. Supermarkets in Norway typically adjust their prices twice a year, once in February and then once again in July.

READ ALSO: Why is food in Norway so expensive?

The Consumer Council, which advocates consumer rights, has said that the significant price hikes are due to a lack of competition.

“The competition in the Norwegian food market is obviously too bad. It has been for a long time, and it is documented here (through reports of price hikes), Inger Lise Blyverket, director of the Consumer Council, told public broadcaster NRK.

She said that the lack of choice made it hard for consumers to vote with their feet and opt for cheaper alternatives.

“This makes it impossible for us to exercise our power as consumers, by choosing cheaper alternatives. When chains and other players in the grocery industry claim there is fierce competition, it isn’t true. Tough measures are needed,” Blyverket said.

Director of the Consumer Council, Blyverket, said that the price rises are a bitter pill to swallow, especially given that supermarkets turnovers increased sharply during the pandemic.

However, supermarkets have said they’ve been forced to raise prices as suppliers are charging more than before due to several factors.

Higher raw material prices internationally, increased shipping costs, high electricity prices, and Norwegian agriculture raising the prices of their products have meant suppliers have passed the cost onto supermarkets, which supermarkets, in turn, pass onto customers.

However, some have said that supermarkets are raising their prices beyond the additional costs passed on by suppliers.

“They (the suppliers) have found that prices in grocery stores are increasing more than the additional costs that grocery chains are paying for products,” Sigurd Birkeland, from the Norwegian Competition Authority, told NRK.

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EXPLAINED: What the revised national budget in Norway means for foreigners 

The Norwegian government has presented its revised budget for 2022. Here's The Local's roundup of some of the key proposals and what they mean for your wallet.

EXPLAINED: What the revised national budget in Norway means for foreigners 

Electric cars to become more expensive

The government will replace the VAT exemption for electric cars with a subsidy scheme. This means that electric cars that cost over 500,000 kroner will be subject to VAT, while EVs that cost less will be exempt from VAT. 

The government has said the cost of buying an EV with a sticker price of 600,000 would become 25,000 kroner more expensive. 

An EV costing more than a million kroner will become 125,000 kroner pricier, according to the government’s proposals. 

“If you can afford to buy a car for 1.7 million, it is only fair and reasonable that you also pay VAT,” Finance Minister Trygve Slagsvold Vedum said of the announcement

The scheme will come into effect next year. 

Free ferry tickets

All ferry journeys on routes with less than 100,00 passengers will be free from July 1st. This is likely to make around 30 of Norway’s 130 connections completely free of charge. 

The free trips will apply to local residents, tourists and other travellers. 

READ MORE: Why some ferry routes in Norway will be completely free this summer

It’ll become easier to get a better deal on energy prices 

The government will offer five million kroner in funding to help improve the Consumer Council’s electricity price comparison site strø

The funding will make the comparison site better so that both spot price and fixed price customers can get the best energy deal available and save money. 

The government expects high electricity prices to continue

The government has written in its revised national budget that it expects high energy prices to continue. 

Tax revenues from the power companies will be used to cover the expenses of the electricity subsidy scheme, which sees the government pick up 80 percent of energy bills when the spot prices rise above a certain amount. 

Experts: Loan and mortgage repayments to increase faster

Loan and mortgage repayments could go up more quickly than anticipated due to increased oil spending, business and financial site E24 reports. 

In the revised budget, the government has said that it plans on spending 30 billion more of revenue from the oil fund than previously expected. 

“I think this is a somewhat more expansive use of money than Norges Bank (Norway’s central bank) had envisioned, and in that sense, I think that in isolation, it could contribute to a higher interest rate path, not strongly, but somewhat higher,” Kjersti Haugland, chief economist at DNB, told E24. 

If Norges Bank raises the key policy rate, lenders will follow suit meaning the loan or mortgage becomes more expensive to repay. 

Counties will be split up to improve local services

Viken will be divided into Akerhus, Buskerud and Østfold. Vestfold og Telemark will be split into two, as will Troms og Finnamrk. 

If parliament can make a final decision before the summer, the division will take place from January 1st 2024. 

The government wants to split the counties to improve the availability of local services in these areas, according to a press release from the Ministry of Local Government

Air passenger tax scrapped for the rest of the year

The air passenger tax, which was shelved for the last few years, will also be frozen until the end of the year. 

Cut in support for public transport

The government will be cutting its support scheme for public transport firms hit by a loss of income related to the pandemic from July 1st. 

For consumers, this means that some firms will cut the routes they offer due to the funding ending. 

Ruter has said that it is already cutting the number of routes from July 4th as passenger numbers are not back to pre-pandemic levels.Routes could also be cut in Oslo and Viken