IKEA’s price increase wave hits Hungarian stores
IKEA also felt the need to react to the macroeconomic changes triggered by the pandemic. The Swedish furniture company which is famous for its stylish yet affordable products has announced to raise prices in many countries, including Hungary.
The 2020 outbreak of the coronavirus pandemic has undoubtedly had many immediate effects. The location of the first viral hotspots and China’s stricter than average measures introduced at the beginning of 2020 have caused many factories to close down, thus creating shortages of many products in several industries all around the globe.
These processes first impacted the market of electronic devices. The virus, which has spread to nearly all countries around the world by now, caused a major disruption in the supply chain and raw material production which led to worldwide product shortages, while demand stayed the same.
These are the macroeconomic processes that cause inflation to reach sky-high levels, unprecedented in the past 30-40 years.
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István Madár, one of the leading analysts at Portfolio said just two months ago, that “[a] dynamic price increase has begun which can be attributed not only to the rising raw material and energy costs but also to the changes in wage and demand”.
“If you look at the price of wood, there are places where it experienced a 300% price increase,” – Keith Riddle, the vice president of Velux’s sales and marketing said to Pénzcentrum.
Recently, IKEA has announced a price increase in the UK, after establishing stricter rules for their employees regarding vaccination.
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Hungarian Pénzcentrum decided to inquire about the situation regarding the Hungarian stores to which IKEA basically replied the same as to Euronews and Businessinsider.
“Since the start of the pandemic, IKEA has managed to absorb the significant cost increases experienced across the supply chain while keeping prices as low and stable as we possibly can. Higher costs have affected the global economy, and like many retailers, we have had to raise our prices.”
While on average the price increase in the UK is expected to be around 9%, the Hungarian division said that they do not have exact numbers, but the company tries to reflect on each countries’ situation in relation to inflation and raw material costs as well as supply chain effectiveness.
According to Pénzcentrum, the company also added that many of their products remain unchanged, but the increase in prices will potentially affect most of their portfolio.
Source: Pénzcentrum.hu, euronews.com, businessinsider.com