Price rigidity in the Italian grocery retailing sector: evidence from scanner data

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 .