Price Rigidity in the Italian Grocery Retailing Sector: Evidence from Scanner Data
Raffaele Santioni¹, Isabella Carbonaro²
¹Economic Research Department, Branch of Rome, Bank of Italy, Rome, Italy; ²Economics and Territory (DET), University of Rome Tor Vergata, Rome, Italy

This paper provides an empirical evidence on the relevance 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 scanner dataset from large grocery-retailers for three product groups: dried semola pasta, extra virgin oil olive and tomato pulp. These products represent an important share of italian households food consumptions and they are sold by large and small-medium size manufacturers. We observe a large price heterogeneity at regional level that depends, not only on market structure, but also on consumers preferences: local brands play a major role in the South of Italy respect to the North, where indeed national brands and also private label are more developed.

The concentration of Grocery Retailing Sector in italian regions influence many aspects of the supply structure: it appears negative correlate with the number of products available to consumers and positive correlate with the measures of price rigidity.

The joint analysis of spatial price diversity and temporal price rigidity, seems to be an interesting suggestion for future work.

[1] Bils, M. and Klenow, P.J. (2002). Some Evidence on the Importance of Sticky Prices, NBER, Working Paper 9069, National Bureau of Economic Research, Cambridge, Mass.

[2] Cecchetti, S.G. (1986). The Frequency of Price Adjustment: A Study of the Newsstand Prices of Magazines, Journal of Econometrics, Vol. 31, pp. 255-274.

[3] Herrmann, R. and Moeser, A. (2003). Price Variability or Rigidity in the Food- retailiang Sector? Theoretical Analysis and Evidence from German Scanner Data, presented at the 25th International Conference of the International Association of Agricultural Economists, Durban, South Africa, 16-22 August 2003.

[4] Powers, E.T. and Powers, N.J. (2001). The Size and Frequency of Price Changes: Evidence from Grocery Stores, Review of Industrial Organization, Vol. 18, pp. 387-416.

Keywords: Determinants of price rigidity; Frequency of price change; Grocery retailing; Scanner data

Biography: B.A. University of Rome Tor Vergata, Rome (Italy). Degree in Financial Market and Institutions with Thesis on “Inflation, Purchasing Power and Income Distribution: measurement problems”. Final mark: 110/110 cum laude. Supervisor: Prof. Martino Lo Cascio.

Ph.D (attending) University of Rome La Sapienza, Rome (Italy). Responsible: Prof. Guido Pellegrini.

Main fields of interest: analysis of price heterogeneity related to different market structures; measuring inflation by consumer price indexes for sub-groups of popolation, construction of bilateral and multilateral spatial price indexes.