How Norway's government plans to lower the price of food
Jonas Gahr Støre, the country's prime minister, said at a press conference announcing the new measures that tougher competition in the food retail market could help contain price growth and improve the variety of goods on offer.
'Rising food prices are something households feel every single day,' he said. 'Stronger competition in the grocery sector could give consumers better variety and lower price growth. That's why the government is introducing new measures to strengthen competition.'
According to Statistics Norway (SSB), food and beverage prices have for years outpaced general inflation, something experts blame on the tight control a handful of supermarket giants have over retail and wholesale, together with high import taxes and a challenging geography.
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The government announced four main measures:
better price information for consumers
, by ensuring that companies have correct unit prices, promotions and special prices
increasing access to prime retail locations for competitors
, by, among other things, taking action against the anti-competitive use of exclusive leases.
increasing transparency in the food value chain
by, among other things, forcing the food giants to keep separate accounts for their businesses at each step of the retail chain, making it easier for regulators and consumers to see what margins they are earning.
reforming the Good Practices Act
, or
loven om god handelsskikk
, to make it easier to scrutinise agreements between the food giants and their suppliers, including on issues like the use of discounts and private labels.
Norway's grocery chains were cautiously positive towards the changes. Coop said it was "positive about measures that strengthen competition in the grocery value chain, so that consumers get the lowest possible prices for food."
"We will now carefully consider whether these are proposals that will be positive for our customers. We will talk to the government about this on Friday," Stein Rømmerud, executive vice president of communications at Norgesgruppen, told E24.
The proposals were dismissed, however, by the Centre Party leader Trygve Slagsvold Vedum, who is calling for VAT on food to be cut from 15 percent to 10 percent to lessen the impact of high prices on consumers.
"None of these proposals will have any impact on food prices for the foreseeable future," he said. "It's better to cut VAT on food from August 1st.
At the press conference, Jonas Gahr Støre said that the finance ministry had rejected the idea of reducing VAT on food because "experience shows that the money from these reductions gets eaten up before it affects what's in people's shopping carts. It is not targeted or worth spending money in that way. It also takes responsibility away from the grocery chains."
But Vedum dismissed this as "pure rhetoric", saying that it had been Gahr Støre himself who had blocked the measure when the Centre Party had called for it before the party left the government coalition in February.
"It is important to respect that there are different views, but it was the Labour party's leader who said no to lower food VAT," he said.
Erik Fagerlid, a retail expert, was also critical of the government's proposals, claiming that all of these measures have been floated without success for more than a decade.
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"The government has already received answers to all the questions it's now asking and not so long ago. This has been investigated from here to eternity," he told the E24 business site. "I have submitted thoughts, consultation responses and reports to seven ministers. [Cecilie] Myrseth is number eight."
The measures, if anything, threatened to make food more expensive by forcing the food giants to spend more on lobbying, he claimed.
"The money spent on lawyers, consultants and PR advisors over the last 20 years comes from somewhere. All other things being equal, this passes the costs on to you and me as consumers. It has made groceries more expensive."
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