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Pricing in inflationary times- the penny drops

  • Chakraborty, Ratula

    (Norwich Business School, University of East Anglia)

  • Dobson, Paul

    (School of Business and Economics, Loughborough University)

  • Seaton, Jonathan S.

    (Corresponding Author, Department of Economics, University of Warwick,)

  • Waterson, Michael

    (Department of Economics, University of Warwick, JEL classification: L16 ; L81 ; E31 Key words: Pricing behaviour ; supermarket prices ; inflationary behaviour ; price indexes)

We investigate micro pricing behaviour in groceries (the UK’s most important consumer market) over eight years including the inflationary period of early 2008. We find behaviour sharply distinguished from most previous work, namely that overall basket prices rise but more individual prices fall than rise! This is consistent with retailers obscuring the fact of rising basket prices. We employ a significant new source of data that captures cross-competitor interplay in prices at a very detailed level. Unusually but importantly, our work takes into account that consumers buy baskets of goods, rather than individual products, when shopping at supermarkets.

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File URL: http://www2.warwick.ac.uk/fac/soc/economics/research/workingpapers/2011/twerp_975.pdf
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Paper provided by University of Warwick, Department of Economics in its series The Warwick Economics Research Paper Series (TWERPS) with number 975.

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Date of creation: 2011
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Handle: RePEc:wrk:warwec:975
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