But the figure is stable on a monthly basis
In December, costs from grocery suppliers to supermarkets experienced a notable uptick, with the Infometrics-Foodstuffs New Zealand Grocery Supplier Cost Index (GSCI) revealing a 4.5% increase compared to the same period the previous year.
While supplier cost increases persisted at elevated levels compared to a year ago, there was a discernible moderation in the annual pace of change.
Brad Olsen (pictured above), CEO and principal economist at Infometrics, noted that despite the higher costs, the index remained unchanged month-on-month from November – a stability attributed to the customary summer cost change moratorium, preventing alterations on most items during the holiday period.
“December usually sees an unchanged index, with this outcome occurring in 2018, 2020, and 2021, with many items remaining the same in cost, and only more seasonal and perishable items changing,” Olsen said.
What’s the GSCI?
The GSCI, commissioned by Foodstuffs New Zealand, serves as a critical metric measuring the change in the list cost of grocery goods charged by suppliers to the Foodstuffs North Island and Foodstuffs South Island co-operatives. The index uses extensive data from Foodstuffs NZ, encompassing over 60,000 products, making it the largest dataset of its kind in New Zealand. On a monthly basis, the index provides insights into the costs supermarkets bear to stock their shelves, with supplier costs constituting a significant component, representing two-thirds of the on-shelf price.
Cost increases in December
Despite the overall unchanged index, December witnessed more items experiencing cost increases compared to the usual trend for the month – and these increases were more substantial compared to those in 2019 and 2020.
In December, the cost of just more than 1,900 items increased, significantly fewer than the monthly average of 5,200+ seen throughout the rest of 2023 due to the moratorium, yet considerably higher than the 370 items that rose in cost in December 2020. This year, the level of cost increases skewed higher, with 18% of changes representing a rise of more than 20%, compared to 12% in December 2020.
While two-thirds of departments experienced no change in December compared to November due to the moratorium, all departments retained higher supplier costs than the previous year, reflecting prior increases.
“Seasonal and perishable items continued to see some changes in cost, including some seafood and meats which saw marginal increases,” Olsen said. “Produce costs also increased, driven by higher fruit costs such as plums and strawberries. However, a number of summer vegetables also saw falls in costs, like for avocados and tomatoes.
“Although a number of input price indicators support the likely continued moderation in supplier cost increases in 2024, the recent spike in shipping costs risks re-inflaming supply chain concerns globally.”
To compare the latest results with the previous ones, click here, here, and here.
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