IKEA to hike prices by 9% due to supply chain woes
inflation Due to persistent supply and transportation disruptions, Ikea consumers will have to pay extra in 2022 when they buy at its stores.
IKEA will hike its prices by an average of 9 per cent next year due to ongoing supply and transportation disruptions, the company that operates most of the Swedish furniture giant's stores. The announcement comes as pandemic-fuelled shortages and shipping challenges ramp up inflation and pinch economies globally, with consumers increasingly feeling the bite.
"Like many other industries, IKEA continues to face significant transport and raw
material constraints driving up costs, with no anticipated break in the foreseeable future," said Ingka Group, the holding company that owns 90 per cent of IKEA's stores.
These higher costs - which are mostly being felt in North America and Europe - will now have to be passed on to customers, it added in its statement. "The average of the increase in Ingka Group is
around 9 per cent globally, with variations across Ingka Group countries and the range, reflecting localised inflationary pressures, including commodity and supply chain issues," Ingka Group said.
According to the company, IKEA franchisor Inter IKEA Group absorbed costs amounting to €250 million (US$283 million) across 2021 due to these logistical tensions, which were exacerbated by the rebound in demand after the first phase of the pandemic.
Last month, Inter IKEA Group reported a 17 per cent drop in annual profits, attributing the dent to a steep increase in transport and raw material prices. Container transport prices are at record levels following the outbreak of the COVID- 19 pandemic, which has disrupted maritime logistics.
At the same time, the franchisor behind the world's largest furniture seller reported higher sales for the year at €25.6 billion, up 8 per cent.
However, a global surge in energy prices, supply chain snafus, and rising demand have resulted in out-of-control inflation. In November, inflation in the euro zone hit 4.9 percent over a year, a new high since the single currency was introduced in 1999. Prices in the United States increased by 6.8% last month compared to November 2020, reaching their highest level in 39 years.
Courtesy :https: https://www.channelnewsasia.com/world/ikea-hike-prices-9-due-supply-chain-woes-singapore-stores-see-3-increase-2408996