Thursday, July 18, 2024
28 C
Brunei Town

IKEA to hike prices by 9pc due to supply chain woes

STOCKHOLM (AFP) – IKEA will hike its prices by an average of nine per cent next year due to ongoing supply and transportation disruptions, the company that operates most of the Swedish furniture giant’s stores said.

Thursday’s 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,” Ingka Group, the holding company that owns 90 per cent of IKEA’s stores, said in a statement.

These higher costs – which are mostly being felt in North America and Europe – will now have to be passed on to customers, it added.

“The average of the increase in Ingka Group is around nine 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 EUR250 million (USD283 million) across 2021 due to these logistical tensions, which were exacerbated by the rebound in demand after the first phase of the pandemic.