Foodstuffs have kept store price increases below supplier cost rises as part of its efforts to help New Zealand tame inflation.
The two Foodstuffs co-ops have recorded a fifth consecutive month of retail prices rising more slowly than supplier costs for a basket of products in the same categories Stats NZ monitors to measure food price inflation.
In July, the Foodstuffs co-ops recorded an average retail price increase of 0.7 per cent year-on-year for the comparable basket, while Stats NZ’s nationwide rate was 0.6 p.a.
Over the same period, the co-ops’ costs to purchase their baskets have risen by 3.2 percent on average—the tenth consecutive month Foodstuffs’ supplier costs have outpaced retail price increases.
Foodstuffs NZ Managing Director Chris Quin said the data showed that the co-ops have continued to help tame inflation in New Zealand.
“Just this week, we saw the Reserve Bank cutting the Official Cash Rate, recognising that the heat has come out of consumer price inflation, which is now only slightly above the Bank’s target maximum of three percent,” said Quin.
“Helping to bring that overall rate down is that food price inflation is now meagre and has been sustained under one percent since March.”
At the same time, supplier cost rises have remained at around three percent over the past five months due to economic and global inflationary pressures.
Earlier this week, the latest Infometrics-Foodstuffs Grocery Supplier Cost Index showed supplier costs across a more comprehensive set of 60,000 products had increased by 2.4 p.a. for the year to July.
Quin said the ongoing difference between supplier cost and retail price increases showed that Foodstuffs' co-ops were focused on cost efficiencies and not passing on the full effect of inflation to customers.
“We’re doing everything we can to keep prices low, not so that customers keep returning but also so households can afford the essentials and our wider economy can get back on track.”
Deflation has also continued for many seasonal crops. As a result of more abundant supply and significant year-on-year price deflation, many fresh seasonal vegetables accounted for nine of Foodstuffs’ top-ten price falls.
Other staples that saw price falls included eggs, Pam's canned tomatoes and canned spaghetti, Pam's cheese, wheat biscuits, and shoulder chops.
Conversely, foodstuffs produce experts said that growers of covered crops like tomatoes and capsicum were at risk of rising power costs when heating their glasshouses during winter.
The cost of electricity in New Zealand has been emerging as a supply-side factor in inflationary pressures. Quin said that the nation must consider the long-term effects of underinvestment and get the settings right.
Foodstuffs buyers have also been closely monitoring current events in the Middle East and Europe to mitigate the risk of disruptions if conflicts escalations occur.
“But it’s all in a day’s work for our buyers and wider team of 39,000 Foodies – getting food and essentials to our stores and customers, and at the best prices, is what New Zealanders trust us to deliver, and have done for over a century, and it’s what we’re proud to be doing.”
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