But the pace of growth slows on an annual basis
Costs from grocery suppliers to supermarkets increased again in August, but the pace of growth has continued to ease on an annual basis, according to the Infometrics-Foodstuffs New Zealand Grocery Supplier Cost Index (GSCI).
GSCI, which measures the change in the cost of grocery goods charged by suppliers to the Foodstuffs North Island and South Island cooperatives, showed a 6.6%pa rise in what supplier costs in August 2023 compared to the prior year.
“August saw a further moderation in the pace of annual increases from suppliers to supermarkets,” said Brad Olsen (pictured above), Infometrics CEO and principal economist. “But the monthly increase, despite being the smallest so far in 2023, is still around triple the average seen before cost increases started to accelerate, with recent trend growth of around 4%pa now looking like a possible ‘new normal.’”
Every month, the index tracks what it costs supermarkets to buy the goods to put on the shelf, using Foodstuffs NZ data across more than 60,000 products the company buys.
Previous analysis showed that supplier costs represent a massive two-thirds of the on-shelf supermarket price.
“Some more normalcy seems to be coming into supplier cost changes, with some more usual seasonal falls occurring, and fewer continued large increases in the produce department,” Olsen said.
Supplier costs continued to increase across the board in August from July, but the pace of annual increases further eased.
“Frozen foods saw the largest monthly increase in supplier costs, which pushed the department into having the highest annual rise,” Olsen said. “Flat produce costs in the August month means that produce costs on an annual basis rose 8.5%pa, the slowest annual rise since February 2022, although broccoli, potatoes, and lettuce costs rose further. Groceries were up too, driven by higher pet food and sauce costs.”
Last month, the items that increased in cost numbered nearly 4,000, still notably higher than the roughly 2,500 items that saw cost increases in August 2020.
“However, external factors, including a further burst of higher transport costs, and some reacceleration of domestic input cost growth, reinforces concerns that inflationary pressures may stabilise at a lower, but still high, rate, which will keep pressure on supplier costs generally across the supply chain,” Olsen said.
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