Statistics New Zealand Food Price Index (FPI) for April 2023 has revealed significant changes in grocery prices over the last calendar year.
The new data has shown that the FPI increased 12.5 percent in April 2023 compared to a year ago.
Furthermore, the average product increase from suppliers to the Foodstuffs cooperatives of the same products measured in the FPI basket increased by 10.3 percent. The retail price for customers was 10.5 percent, meaning cooperatives members held prices in their store at two percent less than inflation in April.
However, the prices were up 0.2 percent from suppliers to Foodstuffs on the FPI basket for the month, after 11 months of being under.
According to this month's informetrics, the Foodstuffs New Zealand Grocery Supplier Cost Index shows an overall cost increase from grocery suppliers to supermarkets up 10 percent per annum in April.
“The inflation fight is proving to be long and difficult, with a range of underlying drivers keeping the pressure firmly on the cost of growing, manufacturing and retailing food in New Zealand,” said Foodstuffs NZ Managing Director Chris Quin.
Commenting on the latest food price inflation figures released by Stats NZ today, Quin shared that the biggest challenge from paddock to plate was inflation.
“We’re doing everything we can to fight inflation, buying well to get products at a fair price for customers and running our stores and supply chain as efficiently as possible to keep our costs down.”
However, Quin emphasised several factors that were making the battle more challenging. Some of the significant drivers were outside the cooperative's control, making getting food on the shelf more expensive.
The Infometrics-Foodstuffs New Zealand Grocery Supplier Cost Index (GSCI) shows a 10 percent per annum increase in what suppliers charged supermarkets for goods in April, with suppliers still facing high input cost pressures.
The cooperative has seen many supplier price increases, with some increasing prices for the second or third time over the last 12 months. Quin shared that the cooperative actioned over 17,500 product price increases between 29 January and 30 April from over 450 vendors after the average summer prices variations moratorium concluded.
“Suppliers are continuing to face extra challenges and added costs, including the cost of raw materials, services such as logistics, the ongoing CO2 shortage and higher labour costs, which is driving the large number of supplier cost increases we’re still experiencing.”
Supplier cost increases are not the only factors impacting food prices; transport, wages, and one-off weather events also add to inflationary pressures.
Across the Foodstuffs logistics network, there has been a consistent raft of operational price increases, amplified by ongoing inter-island service disruptions, increased sick leave due to Covid-19 and significant labour pressures facing the transport industry.
Ongoing damage to key roading and infrastructure due to floods and cyclones has made it challenging for the cooperative to get supplies to its stores across the North Island.
Furthermore, wage increases are a significant contributor to inflation. Foodstuffs have struggled to find skilled workers, such as Class 5 truck drivers, in key business sectors due to the tight labour market.
“Weather remains the wild card in terms of domestic inflation this year. The weather in Auckland earlier this week is evidence of this, and we’re still seeing some of the flow-on effects of Cyclone Gabrielle.”
The Foodstuffs are most recent Customer Insights Survey shows 59 percent of respondents consider they are in a precarious financial situation, up 2 percent from last quarter. Over half expect their financial circumstances to worsen over the next year.
Quin said the biggest concern for Kiwis right now is the cost of food. The latest survey makes evident that customers are shopping more across brands to find value, cutting back on non-essentials, meat, and fruit and vegetables, with an increase in purchasing frozen products compared to a year ago to reduce waste, make their budgets go further and manage cost increases across fresh produce.
“Shopping seasonally for produce is still the best option for customers, with gold Kiwifruit and mandarins both great value. Improved weather across the country has also made greens more affordable, with supply finally coming right post cyclones and floods. Customers can find value in produce like cauliflower, broccoli, and lettuce.”
The director iterated the importance of Foodstuffs stores maintaining FPI prices below the FPI for 12 months since May 2022. Stores in the Foodstuffs co-operatives must hold prices below FPI for 12 months since May 2022.
“Retail and supplier cost increases were generally in step in April, but it is the first time since we began this analysis that the retail price increase to our customers was above product cost increases from our suppliers (0.2% above).
Quin explained that the Foodstuffs had been absorbing record supplier increases over the last 11 months. Still, the sustained level of increases coupled with a range of other underlying cost pressures has meant the cooperative has come in slightly above supplier cost increases this time.
