The director of Foodstuffs New Zealand, Chris Quin, said that the outlook for fruit and vegetable prices improved as warmer weather brought more favourable growing conditions. Despite this, headwinds remained in the form of a lower exchange rate, higher commodity costs and volatility in international fuel prices.
Quin’s comments followed the release of Stats NZ’s latest food price index (FPI) figure, tracking the prices of a representative basket of goods. While the cost of the FPI basket grew eight percent pa in September 2023, and prices for the same product categories were up 7.5 percent pa at the two Foodstuffs co-operatives’ stores.
“For 17 months, we’ve been comparing our performance for retail prices with Stats’ NZ’s basket, and Foodstuffs have always been lower,” said Quin.
“In that time, we’ve been absorbing higher wages, fuel and electricity costs, and our suppliers’ extra input costs have slowly been flowing through to prices on shelves.”
Quin continued that it was no secret that New Zealand has a severe retail crime problem, which Retail NZ has estimated is costing the wider industry roughly $2 billion annually. It’s something Foodstuffs New Zealand had to invest in for the safety of its teams and customers.
Foodstuffs is doing everything it can to tighten further its focus on buying well and creating efficiencies within its business operations.
Quin said it was a positive sign that the weather was slowly improving, meaning fresh produce's flow and value were also improving.
The spring weather has been volatile, but supply has been improving for most green vegetables. Asparagus season is finally kicking in, and Foodstuffs is starting to see some berry fruit coming through. The export avocado season is also underway, and due to the skin damage caused by the rain earlier this year, a lot of stock is coming onto the domestic market, creating opportunities for shoppers.
Foodstuffs data shows avocado prices were down 11 percent in September, year-on-year, with sharper falls seen for cauliflower (37 percent), tomatoes (35 percent), broccoli (33 percent), green kiwifruit (25 percent) and cabbage (24 percent).
“Our produce experts say kumara and pumpkin supplies remain tight, and current prices reflect that. Carrots will be short until the new season starts.”
He said value could also be found in the meat department, specifically lamb, with the price of shoulder chops down nine percent in September, year on year.
“Chinese consumers’ demand for lamb has softened post-Covid and is expected to stay lower. That surplus supply is pushing down global prices. China usually buys about half New Zealand’s lamb exports, so much of that meat stays here instead.”
At the same time, supply shortages are making several essential food imports costlier, with basic food commodity prices rising two percent in September, month on month, despite falling six percent pa.
Quin said that rice was still going up, mainly due to India’s ban on certain imports. Likewise, sugar, cocoa, and peanuts have all had growing or production woes, and most of them are
part of the FPI basket, which has offset some of the local decreases.
Energy prices also surged 8.3 percent in September before correcting and now threaten to rise again as world markets react to events in the Middle East.
“Higher diesel prices hit our truck fleets in September, and while international shipping costs are mostly back to pre-Covid levels, the lower exchange rate is offsetting the savings from improved shipping costs, meaning we’re not seeing prices for imported products come down as much as we’d like.”
Earlier this week, the latest Infometrics-Foodstuffs New Zealand Grocery Supplier Cost Index showed a further slowing in the average rate of cost increases from suppliers to supermarkets across 60,000 products, at 6.1 percent pa in September 2023 compared to 6.6 percent pa in August.
The Index found all but one supermarket department, fresh produce, saw higher supplier costs in September compared to August, month on month. In general, more items were rising in cost, but by smaller magnitudes. Infometrics said concerns remained for sustained input cost pressures, given higher diesel costs and the potential for a lower exchange rate affecting imports.
Foodstuffs’ data on the smaller group of products in Stats NZ’s FPI basket shows supplier costs rose 7.3 percent pa in the year to September, on average, across the same categories (after 7.8 percent pa in August).
“It’s good to see cost increases from our suppliers continuing to slow down.”
Quin stated that the co-operative knew suppliers were battling the same pressures many businesses are, both here and overseas, notably higher wages and input costs.
“We’ll continue to work with suppliers to see how we can keep the cost of food down for consumers while also recognising inflationary pressures can only be absorbed by businesses for so long.”
