Supplier costs continue to increase, although momentum in the increase to supermarkets has eased compared with 2022. The Infometrics-Foodstuffs New Zealand Grocery Supplier Cost Index (GSCI) shows an 8.8 percent per annum (pa) increase in what suppliers charged supermarkets for goods in May 2023.
"The 8.8 percent pa increase in the GSCI is an improvement on the double-digit increases seen since October last year. However, the annual cost growth rate has moderated due to May 2022's record monthly increase in the GSCI falling into the comparison period," said Infometrics Chief Executive and Principal Economist Brad Olsen.
"Costs haven't fallen, but they are rising slower than seen in some months of 2022. Importantly, the May 2023 monthly increase of 0.4 percent is still in the top quartile of monthly cost increases seen in the GSCI."
The Infometrics-Foodstuffs New Zealand Grocery Supplier Cost Index (GSCI), commissioned by Foodstuffs New Zealand, measures the change in the cost of grocery goods charged by suppliers to the Foodstuffs North Island and South Island co-operatives.
The Index utilises detailed Foodstuffs NZ data across over 60,000 products Foodstuffs buys to stock in store, making it the largest dataset of its type in New Zealand to give a real-time view of supplier cost changes.
Every month, the Index tracks what it costs supermarkets to buy the goods to put on the shelf. Previous analysis shows that supplier costs are a significant component of supermarket prices, representing two-thirds of the on-shelf price.
"Input costs for suppliers, including wages, raw materials, and other services, continue to rise. These higher input costs are still pushing suppliers' costs to supermarkets, albeit at a less frantic pace than during 2022."
Olsen continued that both global indicators and domestic data point towards further moderation in cost pressures over time. However, costs have risen faster than normal, even if the growth rate is less acute than last year."
The number and magnitude of cost increases remain larger than before.
In May 2023, nearly 5,600 items increased in cost, compared to fewer than 1,200 in May 2020 and around 2,200 in May 2019. From 2018 to 2019, an average of fewer than 2,000 items a month experienced an increase in cost. May 2023 saw over 12 percent of cost changes increasing by more than 20 percent, compared to nine percent of products increasing by the same amount in May 2020 and only seven percent in May 2019.
"Supplier costs rose across all departments again in May, although the annual headline increases have moderated as the large May 2022 monthly result falls into the comparison period."
Olsen explained frozen goods, produce, and grocery departments saw the most significant monthly movements, with a variety of products seeing larger increases. Frozen food price increases were across the board, with produce prices pushed up by avocados, cucumbers, and bananas and grocery cost rises underpinned by pet food, energy drinks, and chocolate.
