Stats NZ Food Price Index (FPI) shows food prices increased 10.3 percent for January 2023 compared to a year ago. In January, the average cost increase from suppliers to the Foodstuffs co-operatives on the same products measured in the FPI basket was 9.4 percent, while the retail price increase from Foodstuffs supermarkets was 9.3 percent. Foodstuffs kept their prices 0.1 percent below cost increases and has sat below inflation for nine consecutive months.
“The impacts of January’s historic flooding across the upper North Island will likely add further challenges to the inflation fight at the checkout,” said Chris Quin, Foodstuffs NZ Managing Director.
“The recent devastating floods have hit Auckland’s vegetable growing regions hard at a critical time of the growing season and are making things challenging for our whole food ecosystem from paddock to plate.
“Auckland’s wettest January on record has been really tough for local growers, with the long-term impact of the floods on crops like onions, lettuces and some root vegetables still to be felt.
“In Auckland, three of our stores in Wairau, Newmarket and Mt Albert had to close due to severe flood damage. Wairau and Newmarket re-opened within seven days but the Mt Albert store is closed for an extended period due to the impact.
“We are also facing ongoing flood-related logistical challenges and longer transport times, because of road closures and significant repairs required from Coromandel through to Northland. Damage to infrastructure is meaning longer routes and driver hours and this is exacerbating the already chronic shortage of experienced drivers.
“Domestic price pressures remain high, including the tight labour market, pressure on wages and salaries, persistently high fuel (diesel) costs, and high feed and fertiliser costs for suppliers.
“While shipping costs are starting to ease, the handling of empty containers (charged by the shipping lines) remains elevated because of portside congestion in New Zealand, so we’re still experiencing very high costs.
“New Zealand food price inflation over the past 12 months has remained lower than in the most competitive grocery markets (US and UK) - with food price inflation in the UK increasing 16.9 percent year-on-year in December of 2022.
“Central banks in the US and UK have recently made more modest interest rate hikes but have signalled they are not finished, noting that more evidence is needed to be confident high inflation has been defeated.
“While there appears to be some optimism on Wall Street that inflation has peaked and markets are roaring back, that optimism has to be tempered with the reality of significant price hikes still being signalled, particularly by major global suppliers.”
