A fall in production is driving up cooking oil prices for supermarkets, even as overall supplier cost increases hit their lowest level in three years, according to Infometrics.
The Foodstuffs-commissioned data analysis suggests supplier costs to its supermarkets have reached their lowest point in years, rising an average of 2% in October compared to the same time last year.
The Infometrics-Foodstuffs New Zealand Grocery Supplier Cost Index, commissioned by the supermarket giant, measures the change in the list cost of grocery goods charged by suppliers to the Foodstuffs North Island and Foodstuffs South Island co-operatives.
Infometrics chief executive and principal economist Brad Olsen says the slowdown marks a significant shift in cost pressures facing supermarkets.
“This annual increase is the lowest in around three years, with the annual increase in September 2021 also at 2.0% per annum,” he said.
“October’s result saw a resumption in the downward trend in the GSCI annual increase, with the annual gain moderating since late 2022.
“This result was driven by a smaller number of monthly changes in cost in October, after a few months of volatility in the number and magnitude of changes.”
Month-on-month data showed around 2300 items increased in cost to supermarkets over October.
Olsen said: “The number of items increasing in cost each month remains above the average seen over 2018 to 2020, but continues to ease from higher levels seen over 2022-2024.
“However, there are still some larger increases occurring, with around one-in-10 cost changes in October being a larger than 20% increase.
“Year on year, costs last October remained higher for all departments compared to October 2023. Around half the number of departments saw the same annual increases in October as in September. Produce cost increases remain limited, up 1.3% per annum, as various vegetable costs were lower, limiting the overall increase.
“Higher butter and spreads costs kept chilled food increases higher. Some of the largest increases continue to be for noodles and cooking oils, with the latter driven by a fall in production globally.”
The Infometrics economist said global supply issues were driving cost increases in specific items rather than broader inflationary pressures.
“Cost increases seem to be more concentrated in certain items that are facing supply issues globally like cooking oils and chocolate and cocoa,” he said.
“Slower wage growth and lower costs for some business inputs is also assisting this trend.”
