IKEA Canada plans to cut prices on more than 1,000 products this year as part of a “multi-million-dollar” investment in the business in the midst of growing cost of living concerns for Canadians.
The furniture retailer said in a news release Wednesday it will be slashing prices throughout the year, citing an internal report that says household finances and disposable income are a growing concern for Canadians.
“Securing the lowest price has been a pillar of the IKEA brand’s Democratic Design philosophy for the past eight decades,” the company said.
“Despite the need to adjust some prices that reflect the increased costs facing businesses, retailers, and consumers the retailer is committed to lowering prices where possible and looks forward to taking price reductions that make it even more attainable for the many Canadians to shop with IKEA.”
IKEA Canada added some of the products reduced in price include the BILLY Bookcase with glass doors at $199 from $249, and the STRANDMON Armchair at $349 from $399.
IKEA’s announcement came as the Bank of Canada said it is holding its key lending rate at five per cent to start the year.
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The hold comes after a significant rate hikes to cool down inflation, which rang in at 3.4 per cent in December. That was slightly up from 3.1 per cent in November, but down sharply from its 8.1 per cent high in June 2022.
Bank of Canada governor Tiff Macklem told reporters Wednesday that conversations at the central bank have shifted from debating whether interest rates are high enough to how long the central bank needs to keep rates at current levels.
Macklem said that rate hikes to date have worked to relieve spending demand, but cautioned that rates could still rise if inflation does not continue to ease. But Macklem warned that future declines in inflation will be “gradual and uneven,” suggesting that the path back to the two per cent target will be “slow”.
“The progress has given us confidence that the rate is high enough. The unevenness, the persistence we’re seeing has us convinced that for now we need to hold where we are,” he said.
Macklem was asked Wednesday why he was not giving Canadians a clearer timeline for interest rate cuts.
“I worry that putting it on a calendar, it’s a false sense of precision. We’re going to have to see how inflation evolves,” Macklem said.
Businesses grappling with inflation are also worrying about the dispute in the Red Sea.
Attacks on ships by Houthi militants in Yemen, who say they are acting in solidarity with Palestinians, have disrupted global commerce with shipping giants rerouting vessels around the southern tip of Africa, a longer and more expensive journey. Higher transport costs have spurred fears of new inflationary pressures just as consumers were getting some relief from prices starting to come down.
Jesper Brodin, CEO of Ingka Group, which owns most IKEA stores worldwide, told the Reuters Global Markets Forum in Davos earlier this month that it has sufficient stocks to absorb any supply chain shocks.
“This is not a year for us to optimise profits,” he said. “This is a year to try to navigate on a thinner profit, but to make sure that we support people.”
— with files from Global News’ Craig Lord and Reuters