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Sobeys has told its suppliers to cut their prices to the retailer by 1 per cent and advised them the grocery chain won’t accept any price increases in 2014.
Sobeys has told its suppliers to cut their prices to the retailer by 1 per cent and advised them the grocery chain won’t accept any price increases in 2014.
(Fred Lum/Fred Lum/The Globe and Mail)

The not-so-virtuous circle of a retail price war

News that Sobeys Inc. is demanding that suppliers cut their prices is the latest sign of what remains broken – if you can call it that – in Canadian consumer inflation. The recovery from the 2008-09 recession has been at its core a cost-cutting recovery, and that’s a key reason why inflation stubbornly refuses to do what monetary policy wonks say it’s supposed to do. Now, with Sobeys upping the ante in the country’s heated retail price wars, this could continue to befuddle central bankers for some time yet.