Ikea Keeps Lid on Billy Price as Euro Inflation Weakens

Ikea will keep a lid on prices of its Billy bookshelves across most of the euro region next year, underscoring the bloc’s struggles as it tries to emerge from the debt crisis.

Bloomberg’s annual Billy index shows that the Swedish furniture chain’s signature bookcase remains cheapest in Europe, with a price of 34.95 euros ($46.48) in Slovakia and the Netherlands. The Dominican Republic topped the list, which is based on the 2014 catalog on Ikea’s website, with a price of 3,995 pesos ($94.72). The bookshelf costs $59.99 in the U.S. and 349 yuan ($57) in China.

Companies from Ikea to Nestle SA are struggling to raise prices in Europe, which only emerged from a record-long recession in the second quarter and where inflation is the weakest since February 2010. The world’s largest food company this year suffered the lowest pricing growth for the first nine months of any year since 2003.

“The outlook for domestic demand in the debt crisis countries is hardly euphoric,” said Alexander Koch, an economist at Raiffeisen Schweiz in Zurich. “But less of a fiscal burden, lower inflation and a deceleration of the negative labor-market dynamics should enable at least a stabilization in the coming quarters.”

Billy’s Dimensions

The Billy index calculates the cost across 43 countries of Ikea’s white bookcase that is 202 centimeters (79.5 inches) high, 80 centimeters wide and 28 centimeters deep. Prices were collected Oct. 15 and converted to dollars at the average exchange rate over the past 30 days.

For next year, the average cost globally is $58.93, little changed from $59.35 in the 2013 catalog.

In local currency, the bookcase’s price only changed in eight countries. It was cut in the Dominican Republic and parts of Australia and increased in Turkey, Greece, Cyprus, the Czech Republic, Poland and the Netherlands, which saw the biggest percentage change at 17 percent.

The Billy index is one of several including the Economist Big Mac Index, which compares the relative cost of goods across countries world wide.

The index, which compares each country’s Billy dollar price against the average, increased throughout the euro region, reflecting a strengthening of 4 percent against the dollar in the past year. The euro was little changed against the greenback to trade at $1.3700 at 12:47 p.m. in Frankfurt.

The euro’s appreciation against the dollar in combination with the adjustments in the cheapest and priciest countries has compressed the cost differential. For 2014, the difference between the costliest and the least expensive bookcase was $48.24, down from $72.14 in 2013.

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