With the latest release of the Food Price Index (FPI), Foodstuffs North Island Managing Director Chris Quin has shared that the inflation of food prices comes in conjunction with impending rate hikes for mortgage holders and a looming recession.
"With inflation stubbornly high, mounting cost pressures on businesses, it will be a tough winter for New Zealand businesses and households," stated Quin.
Commenting on the latest food price inflation figures released by Stats NZ today, Quin shared that inflation was not yet showing signs of loosening its grip, and New Zealanders are continuing to feel the squeeze.
"The cost of growing, manufacturing, importing and retailing food supplies in New Zealand remains under intense inflationary pressures. We balance what suits our suppliers, co-ops, communities and customers."
Quin elaborated that value products remain critical for New Zealanders, with inflation still at record levels. Consumers are shopping around for the best deals, making retailers compete hard for every dollar in their budget.
The Director shared that the cooperatives must buy well to ensure customers can easily find value in-store through accurate pricing and efficient business practices to keep costs under control to combat inflation. Quin further stated that customers hold the cooperatives accountable, making it imperative for each cooperative to do what's right instead of what's easy.
"Our focus on value, including having products customers want on promotion, has meant we've been able to hold price increases to customers well below FPI and supplier cost increases in March."
This month's Infometrics Foodstuffs New Zealand Grocery Supplier Cost Index shows cost increases from suppliers to Foodstuffs for grocery goods remain at elevated levels, up 10.3 percent in March 2023 versus March 2022. This marks six consecutive months where the average supplier cost increase has been above 10 percent per annum.
Food prices globally are still rising, and the United Kingdom, one of the most competitive grocery markets, has seen food prices soar 18.2 percent through the year to February, the sharpest rise since the late 1970s.
Quin said it's tough across the industry from paddock to plate. He shared that, like all businesses, the Foodstuffs cooperative faced persistent input cost pressures across the board, including transport, labour and the cost of goods it buys to put on shelves.
In addition, Quin revealed that the cooperative had high one-off costs from the Auckland floods and Cyclone Gabrielle, which it has absorbed to get stores back open and keep food on shelves.
Foodstuffs' latest Customer Insights Survey shows around 1 in 10 customers (11 percent) said they have a fixed-rate mortgage due in the next six months. Of those respondents, 90 percent expected this renewal at higher interest rates to harm their financial situation.
"As we head into winter, it's getting tougher for many New Zealanders. With interest rates predicted to climb and stay higher for longer, we must focus on delivering the best value for our 3.5 million shopping visits in our stores or online every week."
Significant challenges remain for local growers, manufacturers and food retailers, who are all currently getting to grips with what severe weather events will mean for New Zealand's produce supply in the short and longer term.
Quin recommended customers shop seasonally. Furthermore, he shared that through March, customers have been able to find value in produce like cucumbers (down 13 percent per annum), green cabbages (down 16 percent per annum) and white button mushrooms (down 11 percent per annum).
However, throughout March, the cost of cauliflower and kumara remained elevated due to the extreme weather of 2023. The Director hoped to see continued growth in its chilled and frozen categories as customers adapt shopping habits to increase their budget.
The war on inflation has grown increasingly longer and harder and will require a continued focus on fighting the underlying causes.
