The latest statistics showed that New Zealand still has one of the lowest food price inflation rates in the developed world, but offshore rates suggested a possible upward trend after bottoming out in 2024.
Stats NZ reported a nationwide food price inflation (FPI) rate of 1.5 percent in December, year on year, while the Foodstuffs grocery co-ops saw a rate of one percent in their comparable FPI basket.
The two Foodstuffs co-ops have been monitoring the FPI rate across their stores, including every New World, Four Square and PAK’nSAVE, since mid-2022, when they consciously committed to fighting food price inflation.
December’s figures from Stats NZ and Foodstuffs confirmed that the FPI in New Zealand had crept back up from the deflationary lows reported in June of -0.3 percent and -0.5 percent, respectively (YOY).
Foodstuffs NZ Managing Director Chris Quin said while any rise was not ideal, New Zealand’s rate was still low compared to most countries overseas at the start of what could be a challenging year.
“New Zealand heads into 2025 with an average food price inflationary rate of around one to 1.5 percent. By comparison, Australia’s FPI rate spent the end of last year hovering around three percent, and the average annual rate for the entire OECD climbed back over four percent,” said Quin.
“In Europe, only a handful of countries have seen the same low rates of food price inflation New Zealand recorded in the second half of last year, and most are now seeing it creep back up.”
He said that New Zealand started the year on the front foot by that measure and was well-placed to withstand inflationary supply chain pressures that may arise from what the Treasury described as a highly uncertain global outlook due to increasing trade protection and geopolitical conflicts.
Foodstuffs' latest quarterly survey of over 1800 shoppers showed less concern about inflation than two years ago. The co-op noted the Treasury’s expectation that the CPI would stabilise around two percent from early this year.
“Nevertheless, our co-ops will stay focused on managing inflation in 2025 by constantly seeking good deals for shoppers and running our stores and supply chain as efficiently as possible.”
Primary drivers of Foodstuffs’ one percent YOY rate in December were a -11.2 percent decrease in produce in the co-ops’ basket versus a 3.1 percent rise in meat and fish and a four percent rise in general grocery foods.
Orange kūmara, brown onions, crown pumpkins, and strawberries were the foods with the most significant yearly price decreases.
The co-op stores sold over 1.9 million punnets of strawberries in December, the most popular produce item sold that month and almost half a million more than in December 2023.
Its produce experts mentioned that the overall fruit supply continued to be plentiful and good value. For many summer favourites, supply has been a few weeks ahead of schedule, and new-season apples are expected in stores over the coming weeks.
At the same time, its transport experts said peak season shipping surcharges were coming down but not as quickly as in previous years. This was in addition to increased port charges and rail line closures impacting rail services in the upper North Island.
Quin added that New Zealand can mitigate supplier cost pressures by ensuring that regulations prevent businesses from growing and succeeding.
“Excessive compliance costs and added regulatory complexities, though well-intentioned, often end up increasing the cost of doing business, which ultimately impacts prices for customers.”
