From Iceland — Consumer Association: Price Hikes Hard To Fathom

Consumer Association: Price Hikes Hard To Fathom

Published August 20, 2015

Andie Sophia Fontaine
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The head of the Consumers’ Association of Iceland (NS) has criticised companies who raise prices based on having to pay their workers more, saying that this will contribute to a chain reaction of inflation.

RÚV reports that Jóhannes Gunnarsson, the chairperson of NS, points to IKEA as a positive example, as they have opted to lower prices on their products, even after a collective bargaining agreement was reached which saw IKEA workers receiving a pay rise.

As NS points out, many companies opted to do the opposite, often raising prices beyond the pay increase their workers were granted, while management cited the pay rise as the primary or sole reason for price hikes. This, he says, is a mistake that could spell an inflationary spiral.

“If prices continue to more or less increase, then you get inflation,” he explains. “Then indexed household debt will increase, and then the collective bargaining talks next February are in danger, or some of them anyway. So it matters a great deal that prices increase as little as possible, if at all.”

Jóhannes adds that those companies who have cited pay rises for their price hikes rescind those hikes, and that IKEA’s example demonstrates that it is “completely unnecessary” to respond to having to pay your workers more by making consumers pay more in turn.

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