Stores to Limit Price Markups

Stores to Limit Price Markups

Photo: http://tass.ru

Large retail chains X5 Retail Group and Magnit have agreed to limit the markup on the cheapest basic foodstuffs, the Federal Antimonopoly Service (FAS) reported. Earlier, FAS recommended to keep the retail margin for base products at 10 % till the end of the year.

FAS called for price caps in each category of socially important basic food commodities. It seems that retail chains heed the recommendations on responsible pricing mechanisms. as the Tander company (Dixy and Magnit retail chains), and X5 Retail Group (Perekrestok, Pyaterochka, Chizhik and Karusel) are ready to limit the maximum markup level to 10%.

At the same time, the markups below the threshold level will remain unchanged, FAS said. According to the UN Food and Agriculture Organization, food inflation in the world reached its highest level last December since June 2011. At the same time, the world cost of oil, sugar and other products keep hitting highs as the 2021 food price index reached the highest level in the last 10 years.

Earlier, the Central Bank of Russia announced “two threats” for the country's economy in the coming year. Firstly, “global inflation” with new food price hikes and secondly, “unpredictability” of the world central banks' reaction to the rising cost of food.

Right before the UN Food and Agriculture Organization said that global food prices had risen by 28.1% by the end of 2021 amid international demand uncertainties due to the Omicron COVID variant and rising production costs.

Price caps are normally set on the cheapest basic foodstuffs such as bread, flour, vegetable oil, sugar, salt, milk, cereals (buckwheat, semolina, millet and rice), eggs, pasta and some kinds of fruits and vegetables.

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