“Encouraging Signs In Fight Against Food Price Inflation; Focus On Buying Well And Efficiency Continues,”

The numbers:

Latest Stats NZ figures show retail prices for foods included in its Food Price Index basket of goods rose 6.3%% year-on-year in October 2023, compared to 8.0%pa in September 2023.

Foodstuffs’ data on the same categories shows retail prices at the two co-operatives’ 500+ stores were up 6.3%pa in October (vs. 7.5%pa in September), while suppliers charged them 7.3%pa more, on average, across the same basket of goods categories (vs. 7.3%pa in September).

Foodstuffs’ data shows many vegetable essentials well down in October year-on-year: cauliflower (down 33.6%), broccoli (down 30.7%), lettuce (down 27.5%) and avocados (down 21.3%).

Earlier, the latest Infometrics-Foodstuffs NZ Grocery Supplier Cost Index (GSCI) showed the average cost that suppliers charged the two co-ops across a much wider set of 60,000 goods rose by an average of 5.4%% in the year to October (vs. 6.1%pa in September).

“After almost two years of battling runaway inflation, there are now positive signs that the war is slowly being won at the checkout with supplier cost rises and retail price increases both continuing to fall in October, says Foodstuffs NZ Managing Director, Chris Quin.

“We remain mindful that many of our customers are doing it tough. The fact is we’re still in a local and global inflationary environment, but back around the rate we were seeing in mid-2022. So, it feels like we might be over the hump and trending downwards, but still not where we’d like to be.”

“A key strength of our co-operative model is our local grocers’ ability and desire to respond to economic challenges in the interests of their customers and communities. We saw it during Covid, and we’ve seen it again in the fight against inflation, with our stores doing their best to keep the rate of price increases below the official rate of food inflation.”

Quin’s comments follow the release of Stats NZ’s latest monthly figure for food price inflation, tracking the price of a representative basket of goods within the agency’s Food Price Index.

While the price of foods included in the FPI basket grew 6.3%pa in October 2023, prices for the same product categories were also up by 6.3%pa, on average, at the Foodstuffs co-operatives’ 532 owner-operated stores.

The outlook for summer is looking brighter, with warmer weather and better light levels providing good growing conditions for a range of products, meaning we’re now seeing lower costs and prices, especially for covered crops and greens.

Foodstuffs’ data shows many vegetable essentials were well down this October compared to last year: cauliflower (down 33.6%), broccoli (down 30.7%), lettuce (down 27.5%), avocados (down 21.3%) and capsicums (down 10.2%).

“At the same time, our produce experts say pumpkin supplies are tight, and current prices reflect that. Kumara is expected to run out at Christmas too, because much of the crop was damaged by Cyclone Gabrielle. We should start seeing the new crop coming through in February, which is something I’m sure many New Zealanders are looking forward to.”

“Berries are now in season too, with blueberries already in good supply thanks to our suppliers’ investment in new techniques and technology, and they’re tipped to have a bumper season as El Niño kicks in before peak blueberry season in mid-January.”

Quin says some dairy essentials were also down in price at Foodstuffs stores in October compared to last year, namely butter (down 9.6%) and cheese (down 5.7%).

“Our co-ops know how important these products are to our customers, families in particular, which is why we’re working hard to buy well and running our co-ops as efficiently as we can to keep our prices as sharp as possible.”

Yesterday, the latest Infometrics-Foodstuffs NZ Grocery Supplier Cost Index showed a further slowing in the average rate of cost increases from suppliers to Foodstuffs supermarkets across 60,000 products, at 5.4% pa in October 2023, compared to 6.1%pa in September.

Infometrics said over 5,500 items (9.2%) had risen in cost in October 2023, more than triple the amount in October 2020. Promisingly, produce costs had fallen again, particularly for salad ingredients like lettuce, tomatoes and cucumbers, reducing their annual rise to 6.2%, the lowest in two years.

Foodstuffs’ data on the focused group of products in Stats NZ’s FPI basket shows suppliers charged 7.3%pa more in October, on average in those categories, than they did a year ago – no change from the 7.3% rise seen in September.

Quin says that flattening of the supply cost trend may be related to the stickiness of inflation in some global commodities. “The World Bank's latest Commodities Price Data shows food is still higher than its 2021 average, before Ukraine; and still well above 2020, before inflation kicked off after Covid-19.”

“Promisingly, most grains have fallen back from last year’s highs: wheat, maize, and soy. But rice, nuts, sugar, and cocoa are still well up – those last two being bad news for chocolate lovers in particular.”

“Shipping prices have continued to decrease, and we saw fuel costs dip in October too, certainly since October last year. However, diesel prices are still elevated compared to the rolling average for the year, and a fresh challenge is third party transport providers raising their general rates, some by up to 7%, which our suppliers will be exposed to and which may become another pressure point on retail prices.”

“We’ll continue to keep talking with our suppliers and store owners about ways we can keep fighting the effects of inflation. The trend is clearly steadily downwards, but there’s still a lot of work to do.”

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