The Foodstuffs co-ops said ongoing spikes increased food price inflation in key global commodities in January. The effects of the new US tariffs have yet to be seen.
Stats NZ recorded a nationwide FPI rate of 2.3 percent in January, year on year, while the Foodstuffs grocery co-ops reported a rate of 2.9 percent for their comparable FPI basket.
Since mid-2022, the Foodstuffs co-ops have been monitoring the FPI rate across their stores, measuring the prices of a basket of goods in the same categories Stats NZ monitors, using the same methodology and weightings.
Stats NZ has changed its methodology and weightings this month. It has added delivered meal kits, decreased the weight of produce, and increased the weight of non-alcoholic beverages.
Foodstuffs are still working through the associated methodology to ensure their precise numbers.
Foodstuffs NZ Managing Director Chris Quin said the ongoing price spikes in three global commodities—olive oil, butter, and cocoa—were key contributors to January’s rise in FPI.
“January’s 2.9 percent average across our stores for goods in our FPI basket was lifted by year-on-year increases of 90 percent for olive oil, 52 percent for butter, and 31 percent for drinking chocolate,” said Quin.
“Those spikes are a reminder of how much food prices in New Zealand are influenced by global market forces, with all three in short supply worldwide, and extreme weather a factor in each.”
He added that New Zealanders were paying global prices for global commodities, New Zealand-grown foods, shipping costs, and 15 percent GST, one of the highest sales taxes on food in the OECD.
The two co-ops were committed to serving their communities, creating thousands of jobs, and keeping food prices down, especially now that, as the Treasury noted in December, there was an inflation risk due to overseas tariffs and conflicts.
New Zealand imposes no or low tariffs on most imported food, but some imports could be impacted by tariffs elsewhere. For example, if producers were in a country that must start paying more for imported ingredients, fuels or fertilisers.
On the other hand, if US retail prices for foods from tariffed countries go up, those countries could look to supply other markets like New Zealand, which would lower food prices here. The key message is that some disruptions and distortions can be expected in 2025.
For now, New Zealand food price inflation is still within the Reserve Bank’s target range of one to three percent and below the OECD average of around four percent, and Foodstuffs’ retail rate has been lower or equal to Stats’ overall FPI rate in all but four of the past 33 months.
Orange kūmara, brown onions, canned spaghetti, and green kiwifruit were the foods with the most significant year-over-year price decreases in January.
Foodstuffs produce experts said there was a plentiful supply of fruits like cherries, nectarines, and peaches, with new-season apples arriving several weeks ahead of schedule.
The co-ops’ freight experts report no significant interruptions or price changes in January. Still, the fee Auckland container depots charge trucks rose again this month, and diesel was also up.
Quin said that higher transport costs affect all businesses, big and small. They affect suppliers' charges, which account for around two-thirds of the retail price on the shelf, and they also add to the costs of doing business, which account for another 16 to 17 cents per dollar.
“New Zealand’s not only far from the rest of the world, but also long and thin, with many small communities we serve daily. The government can make a difference in food prices by investing enough in roads, rail, and ferries and ensuring they’re up to standard.”
Foodstuffs’ supplier costs rose an average of 3.4 percent YOY in January for goods in their comparable FPI basket, up from 3.1 percent YOY in December, using Stats NZ’s new weightings.
“For three decades, New Zealand consumers have benefitted from freer global trade that let us buy from more places, often at better prices. Our local family grocers have been doing that for a century, forming co-ops precisely so New Zealand can compete on the world stage,” said Quin.
“Regardless of any trade wars or other disruptions, we’ll keep doing what’s necessary to ensure Kiwi shoppers keep getting the foods they love, when they want them, and at the best price.”
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