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More for Less: Ikea Rolling Back Price Hikes

In a rare move in today’s retail landscape Ikea might actually be lowering prices.

That’s the word from the furniture retailer’s parent company Ingka Group, which told Reuters it plans to cut prices as some of its input costs decrease.

In January, Ikea announced price increases of around 9 percent due to pandemic-inflated raw material costs and shipping fees. As some of those supply chain and logistical pressures eased, the company began rolling back some of those price hikes at the end of its fiscal year in August.

Further reductions on sea transport and metal costs have allowed Ingka and Ikea to continue price reductions. Ingka’s head of retail Tolga Oncu told Reuters that operational efficiencies will allow the company to maintain its profit margins even with the price drops.

“We are optimistic to continue focusing on lowering prices where we can,” Oncu told Reuters. “I am quite optimistic going forward.”

The price drops come at a time when global inflation continues to soar. According to the latest data from the International Monetary Fund, much of the world—including North and Central America, Australia, Western Europe and large swaths of Africa and South America—is experiencing inflation rates of between 3 and 10 percent. And much of Eastern Europe and Russia is dealing with inflation rates between 10 and 25 percent.

Earlier this month, those rates spurred Ingka to launch a $10 million euro ($10.3 million) social fund for workers in Europe. The initiative offers one-off monetary assistance for immediate needs such as rent or medical bills, as well as a 30 percent employee discount on Swedish Food Market items and energy-saving home goods.

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Ikea’s supply chain came under scrutiny this month, as well, after a report from French nonprofit news outlet Disclose accused  the company of having ties to forced prison labor in Belarus. The story alleged that at least 10 Belarusian suppliers to Ikea had links to penal colonies over the last decade. Ikea has said it cut ties with Belarus suppliers at the onset of Russia’s war in Ukraine.