price setting behaviour in the czech republic, micro data evidence

The aim of this analysis was to obtain information on the strategies of retailers of consumer goods andservices in terms of changes to final prices. From detailed data on many price changes in all the monitoredstores we have evaluated, for example, how often the prices of specific items change or rise or fall, and byhow much on average, how these indicators change during the year, whether downwards price rigidityexists and so on.The average price change frequency for all the selected items came to 0.26, which means that approximatelyone in every four prices was changed compared to the month before. A typical characteristic of theprices of regulated items was that these prices mainly rose and this usually by steps of higher percentagesand mostly at the start of the year. Food prices had a higher frequency of price changes, mainly in the caseof unprocessed foods, which is a consequence of the volatile development of the prices of agricultural commodities.The prices of tradables excluding food and fuels continuously fell for the whole of the monitoredperiod and only had a low price change frequency. The prices of non-regulated non-tradables continuouslyand smoothly rose and, with the exception of hypothetical rent and package holidays, this subgroupdemonstrated the lowest frequency of price changes. The prices of fuels changed most frequently while onaverage these price changes were the lowest in size, as they react relatively quickly to changes in the pricesof raw materials and the koruna exchange rate.