Costs continued to increase in all departments, data shows
Supplier cost increases to supermarkets saw another double-digit growth rate in April, according to the latest data from Infometrics.
Infometrics-Foodstuffs New Zealand Grocery Supplier Cost Index (GSCI) showed a 10%pa rise in what suppliers charged supermarkets for goods in April, down from the 10.3% increase recorded the prior month.
“Cost increases remained above 10%pa on average, showing that suppliers are still facing high input cost pressures – although there are some signs emerging of less intense cost increases filtering through the system,” said Brad Olsen (pictured above), Infometrics CEO and principal economist.
“Global conditions are supporting a transition to less acceleration in food cost increases. However, domestic-based inflation remains high and creates uncertainty over future cost pressures.”
The Infometrics-Foodstuffs New Zealand GSCI measures the change in the cost of grocery goods charged by suppliers to the Foodstuffs North Island and South Island cooperatives, using Foodstuffs NZ data across more than 60,000 products the company buys.
Supplier costs are the major component of supermarket prices, representing two-thirds of the on-shelf price, according to previous analysis.
During the month of April, costs continued to increase in all departments, although more recent rises have shown some signs of a more stable, rather than accelerating, pace of cost increases.
“General merchandise, grocery items, and produce saw the largest increases in the April month, with annual growth in produce costs still near 20%pa,” Olsen said. “The increase for grocery goods was driven by continued higher egg prices, as well as cooking oils and sauces. Battery costs also rose.”
“There are also some further increases to produce prices that appear to relate to Cyclone Gabrielle, but some fruit and vegetable prices have also moderated slightly.”
Some drivers of higher input costs to suppliers have shown signs of easing.
“Fuel prices have fallen, but transport costs are set to rise later in 2023 as the government ends the current subsidies on fuel taxes and road user charges,” Olsen said. “Fertiliser prices have also fallen, by 64% over the last year.
“However, global food prices remain stubbornly high, and supply chain challenges continue. Recent analysis from Treasury staff has shown that both demand and supply factors have contributed to higher food inflation.”
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