Latest statistics show that global supply constraints for three popular commodities are still key to New Zealand’s food price inflation rate.
Stats NZ has reported an annual food price inflation (FPI) rate of 3.7 percent in April, while the Foodstuff co-ops recorded an average 2.4 percent year-on-year rate for their comparable FPI basket of products.
The two co-ops have been monitoring the pace of retail price and supplier cost increases at their stores since 2022, based on a basket of goods in the same categories Stats NZ monitors, using the same methodology and weightings.
Key drivers of their 2.4 percent retail price rate in April, year-on-year, were increases of 65 percent for butter, 27 percent for drinking chocolate, 23 percent for chocolate blocks, 20 percent for beef steak and 14 percent for cheese – five products that collectively accounted for over half the co-ops’ overall retail price increase.
Foodstuffs NZ Managing Director Chris Quin said prices for dairy, beef and cocoa are still near record levels on global markets, as falling or static supplies can’t meet consumer demand.
“All three commodities have been impacted by a range of factors affecting farmers worldwide in recent years, including extreme weather, land-use changes and elevated input costs,” said Quin.
“The global constraints for dairy and beef mean New Zealand’s products are in high demand, and earn a premium due to their quality, which is good for our farmers but less for shoppers.”
April’s price increases were mitigated by a -3.3 percent average decrease for fruit and veggies in the FPI basket, including year-on-year price falls of -25 percent for red capsicums and -23 percent for avocados.
Retail prices were again outpaced by supplier costs, with an average 3.6 percent rise in what suppliers charged for goods in the FPI basket.
Earlier this week, Infometrics reported a two percent increase in the Grocery Supplier Cost Index, which monitors the cost of 60,000 goods the co-ops stock.
Quin said Foodstuffs’ latest quarterly survey of over 1,800 shoppers found that most understand that higher supplier costs are impacting them at the checkout.
When asked what factors may have contributed to food price inflation in the last six months, 54 percent pointed to rising supplier costs, which account for roughly two-thirds of the retail shelf price, while 38 percent acknowledged the impact of high international import costs.
“At Foodstuffs, we think it’s important shoppers are fully informed of all the factors driving prices, including the role played by the small group of multinationals who supply many of the groceries we sell regularly, and enjoy a high degree of market power,” added Quin.
“Our co-ops were formed so small grocers could get good deals from big suppliers. More than a century on, New Zealand still needs a strong 100 percent locally-owned grocer who can keep buying well on global markets despite any supply constraints.”
