Supplier costs rose again year on year in June, but momentum in the cost increases to supermarkets has continued to moderate compared with 2022. The Infometrics-Foodstuffs New Zealand Grocery Supplier Cost Index (GSCI) showed an 8.3 percent per annum (pa) increase in what suppliers charged supermarkets for goods in June 2023 compared to a year ago.
“The 8.3 percent pa increase in the GSCI is a further improvement on the 8.8 percent pa pace recorded in May and higher annual increases before that,” said Infometrics Chief Executive and Principal Economist Brad Olsen.
Monthly increases in the last three months have been less intense than the more significant rises in late 2022. However, they are still around triple the pre-pandemic monthly rate.”
Olsen continued that it was necessary to stress that actual costs weren’t falling overall, far from it, but cost increases weren’t as fast-paced as they had been before, a sign of easing pressure on costs generally.
The Infometrics-Foodstuffs New Zealand Grocery Supplier Cost Index (GSCI), commissioned by Foodstuffs New Zealand, measures the change in the cost of grocery goods charged by suppliers to the Foodstuffs North Island and South Island cooperatives.
The Index utilises detailed Foodstuffs NZ data across over 60,000 products Foodstuffs buys to stock in store, making it the largest dataset of its type in New Zealand to give a real-time view of supplier cost changes.
Every month, the Index tracks what it costs supermarkets to buy the goods to put on the shelf. Previous analysis showed that supplier costs were the major component of supermarket prices, representing two-thirds of the on-shelf price.
“Input cost indicators continue to show a moderation of further pressure too. Global food prices show an improvement, and increased imported food costs have moderated since the start of 2023.”
According to Olsen, domestic food input costs are still rising, but at a less intense rate than previously. Imported food prices rose by 13 percent pa in the first quarter of 2023, a slower pace than the 26 percent pa recorded at the end of 2022.
“Supplier costs rose across all departments again in June, although the annual change for most departments showed a further moderation as costs rise at a less intense pace than previously.”
Olsen stated that bakery costs rose monthly, with more significant rises in chilled foods and groceries. The increase in chilled food was driven by higher costs for dairy and chilled meats, and more significant cost increases for grains, chips, and noodles drove the rise in grocery costs.
“Over 4,000 items increased in cost in June 2023, about two and a half times the number back in June 2020. The latest result is still among the top 20 months for the highest number of items increasing in cost.”