Grocery supplier costs increased on average by 2.4% last month, the slowest in nearly three years according to the latest data from Infometrics.
The Infometrics-Foodstuffs New Zealand Grocery Supplier Cost Index (GSCI) measured the change in the list cost of grocery goods charged by suppliers to the Foodstuffs North Island and Foodstuffs South Island co-operatives.
Its report found that while costs continued to rise, the rate at which they are doing so slowed, with a 2.4% increase in what suppliers charged Foodstuffs supermarkets compared to a year ago.
Infometrics principal economist Brad Olsen said just over 3700 items saw the cost increase in July 2024 from the previous month, more than double the number of items that rose in cost in July 2021.
“This figure was also the highest in half a year, and about the annual average, indicating there are still sizeable levels of re-costing ongoing by suppliers.”
He said while it was the slowest annual increase since November 2021, it is still higher than the 1.7% increase averaged between 2019-2021.
“The continued slowdown in the GSCI is encouraging, although still-high numbers of items increasing in cost pose questions for how sustained this slowdown might be.”
“Produce saw the largest number of cost changes, as usual, although liquor, chilled foods, and grocery goods also contributed to the higher number of increases.”
Costs across all departments remained higher in July 2024 compared to July 2023, Olsen said.
“Seafood, chilled foods, and butchery departments saw a reacceleration in the pace of annual cost increases, with various cheese, butter, and other dairy products seeing higher costs due to higher global commodity prices.”
Olsen said higher red meat costs led higher butchery costs and usual seasonal variations saw increases in the cost of out-of-season vegetables.
“Input costs for producers, suppliers, and contributing businesses are still elevated higher, and in some areas are still increasing substantially—like with energy costs.
“A more than doubling in energy costs in the last year for some operators will put further pressure on suppliers as their costs of production have increased. Input cost changes can take time to flow through into cost decisions by suppliers, meaning the impact may not be immediate.”
