Customers view kitchen tools for sale at an Ikea store during opening day in San Andres Cholula, Puebla state, Mexico, on Aug. 11. Koral Carballo/Bloomberg

Ikea, the flat-pack furniture giant, said it had no choice but to push up prices earlier this year as inflation soared, ending a policy of stability over the past few years.

“It hurts my soul that we had to raise prices,” Chief Executive Officer Jon Abrahamsson Ring of the Inter Ikea Group, the worldwide franchiser for the brand, said in an interview. “Unfortunately, we can’t ignore surging raw materials and transport costs.”

Inter Ikea absorbed more than a billion euros ($974,200) of costs over the past two fiscal years rather than passing them on, “but it just wasn’t enough,” the CEO said. He added that Inter Ikea’s now lowering prices on some goods when it can given the rising cost-of-living crisis. Revenue increased 6.5% to 44.6 billion euros, the company said Thursday.

Despite Ikea hitting another sales record, the uplift was mostly driven by price increases as the volume of goods sold was flat amid low availability following supply-chain problems. The current cost-of-living crisis is affecting demand at retailers worldwide as consumers reduce non-essential spending as food, fuel and energy bills mount. Supply shortages of items such as cups and lamps, mainly sourced from Asia, has also held back volume growth.

Abrahamsson Ring said Ikea’s affordability is more important than ever as consumer confidence declines amid growing fears of a global recession. Even with high inflation, the company is trying to keep prices as low as possible this year, the CEO said.

“We see that our low-price range, which is about 50% of our range, is over performing right now,” he said. “People are simply looking for good prices.”

Alongside inflation, Russia was one of the big challenges facing the group, which has previously disclosed it is winding down its operations there, laying off thousands of employees.

Looking ahead, the CEO gave a cautiously optimistic outlook for this fiscal year, saying that supply-chain congestion and cost inflation will start to gradually ease. Sales so far are growing, though volume is still lagging, he said but added that there is still strong growth potential in all Ikea’s 64 markets, particularly Asia and its home market of Europe where Ikea has a 9% to 10% market share on average.

Only subscribers are eligible to post comments. Please subscribe or login first for digital access. Here’s why.

Use the form below to reset your password. When you've submitted your account email, we will send an email with a reset code.