Foodstuffs managing director Chris Quin said that the co-operative was still dealing with elevated transport costs, supplier cost increases, and the effects of the wet weather. Despite this, the work Foodstuffs is doing to fight inflation is having a sustained impact.
His comments follow the release of the latest food price index (FPI) figures from StatsNZ, which tracks the prices of individual food items that make up a representative food basket.
While the year-on-year cost of Stats NZ’s basket grew 8.9 percent in August 2023, average price increases for the same product categories were up 8.3 percent year-on-year at the stores of the two Foodstuffs’ co-operatives.
Quin continued that while inflation remained uncomfortably high, here and overseas, the data suggested the co-operative’ 500-plus local grocers were managing their operations well within the current environment.
“The reason we’re comparing Stats NZ’s monthly FPI figures with our own is to see how we’re resisting the current inflationary environment compared to the wider food industry,” said Quin.
This is the sixteenth month in a row that Foodstuffs’ price increases on the same product categories measured in the FPI basket have risen at a lower rate. It shows that Foodstuffs co-operatives are working hard to keep prices down.
“We know suppliers are helping, too, by managing their monthly cost increases.”
Foodstuffs’ data shows prices on some seasonal items were significantly lower than in August 2022, including avocados (down 25 percent), green kiwifruit (down 14 percent), and lamb shoulder chops (down 11 percent).
“With the longer daylight hours and El Niño moving into position, growing conditions are expected to improve nationwide. Cauliflowers are great buying, and asparagus will soon hit the shelves.”
At the same time, the California grape crop was severely hit by Hurricane Hilary last month, and that drop in supply will soon impact grape prices here. Likewise, courgettes are low in supply now that the Australian season is over.”
Quin said that such examples show how prices are still largely influenced by suppliers and seasonality. Foodstuffs’ data on the same product categories measured in the FPI basket shows supplier costs, what growers, importers, and manufacturers charged the co-ops for the same goods, rose 7.8 percent in August 2023 versus a year ago.
“The cost of goods from our suppliers is the biggest part of shelf prices. On average, supplier costs for the same product categories as the FPI basket have been rising faster than retail prices. Often, we can absorb that, but sometimes we can’t.”
Earlier this week, the latest Infometrics-Foodstuffs New Zealand Grocery Supplier Cost Index, which tracks the entire range of roughly 60,000 products sold to the Foodstuffs’ co-operatives, showed the rate of supplier cost increases slowing to 6.6 percent in the year to August (down from 7.5 percent per annum in the year to July).
Supplier costs rose monthly, mainly in frozen foods, which saw an annual rise of almost nine percent per annum, overtaking produce costs of 8.5 percent per annum. However, food input costs were growing considerably higher, with vegetable inputs up 30 percent per annum, and sugar, confectionery, and fish are still seeing double-digit annual growth.
The feedback the co-operative is receiving is that wages and product costs are the significant issues suppliers are facing.
“On the positive side, we are seeing improved levels of stock availability from suppliers. This has been a struggle in recent years, but there’s now greater stock to hand, which helps with customer choice and availability.”
Quin continued that multiple factors feed food inflation at all supply chain stages, from the cost of raw ingredients like sugar and rice to shipping and fuel. They all ultimately affect what consumers pay at the checkout.
“It’s been a difficult winter, but positive signs are ahead. The days are getting longer and warmer, which means better-growing conditions for some fresh fruit and veggies, and we’re seeing improving road conditions for freight. We hope all those positive trends continue and that inflation loses steam.”
