We apply sets of weekly

The theoretical and empirical macroeconomic literature suggests that price rigidity in industrialized countries is substantial and its causes are manifold. This article provides empirical evidence on the importance of price rigidity in the grocery-retailing sector and on the role of some major determinants of food price rigidity. The analysis is based on a comprehensive weekly dataset of 20 branded foods in German food stores. The statistical analysis shows that food price rigidity is strong in spite of the widespread use of retail sales. Moreover, the importance of psychological pricing in grocery retailing is overwhelming. Econometric results indicate that food prices get more sticky as the number of price actions declines and as psychological pricing becomes more concentrated on a few important price barriers. Firms’ pricing strategies are crucial for food price rigidity, too.

A substantial degree of price rigidity has been reported for branded foods in various studies with scanner data. One possible explanation for price rigidity is the existence of psychological pricing points. The authors analyze to what extent psychological pricing plays a role in grocery retailing and whether it contributes to the price rigidity of branded foods in Germany. Psychological pricing-defined here as just-below-the-round-figure-pricing-is empirically analyzed with scanner data of weekly prices for 20 food brands in 38 retail outlets from September 1996 to June 1999. Psychological pricing turned out to be extremely important in German food retailing. Branded food prices are remarkably sticky and psychological pricing points contribute strongly to price rigidity. Other factors like the sales phenomenon and firm-specific effects are additionally important. [EconLit Classifications: Q110, Q130]. © 2006 Wiley Periodicals, Inc. Agribusiness 22: 51-67, 2006.

By 2022, the European Commission seeks to introduce harmonized, mandatory front-of-pack (FOP) nutrition labeling. The color-graded Nutri-Score is at the heart of the European debate. Yet, little is known about how the information provided in back-of-pack (BOP) nutrition tables interacts with evaluative FOP labels, such as Nutri-Score,

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