Everyday Regular Prices in a Multi-Product Retailer

Using a novel dataset from a large grocery retailer in a European country that never engages in temporary sale promotions, we establish that prices behave very similarly to regular prices set by retailers engaging in temporary promotional sales. Price rigidity, selection and the extent of state-dependence are heterogeneous across items. Pricing of top sales items is more flexible and state-dependent compared to items that represent a small share of total revenues, a result consistent with price setting in a multi-product firm characterized by rational inattention.