Low Food Price Inflation Rate In August Underscores Foodstuffs Co-ops’ Efforts To Give NZ A Fair Deal At The Checkout

• Stats NZ’s food price inflation measure increases 0.4% p.a. in year to August 2024
• Foodstuffs’ average retail prices increase 0.1% p.a. in the co-ops’ comparable basket
• Supplier costs in Foodstuffs basket rise 2.6% p.a. vs. 2.3% p.a. for the wider GSCI basket

The Foodstuffs grocery co-operatives have recorded another month of food price inflation at their stores that’s below the official national average – underscoring their work to help control the cost of living and give New Zealanders a fair deal at the checkout.

Stats NZ today released its latest national food price inflation figure, of 0.4% p.a. in the 12 months to August, while the Foodstuffs co-ops recorded an average retail price increase of 0.1% p.a. for a comparable basket of goods, across their 500+ PAK’nSAVE, New World and Four Square stores.

It’s the sixth consecutive month that both rates have been below 1% p.a., and the eighth time in the last year that Foodstuffs’ rate has been below Stats NZ’s national average.

The latest result follows the release of the Commerce Commission’s first Annual Grocery Report, which acknowledged the role high inflation had played in the rising cost of living from 2022-23, and noted the problem was worldwide and largely caused by international disruption and global supply chain issues like those caused by COVID-19 and the Ukraine War.

Foodstuffs NZ Managing Director Chris Quin says the Commission’s report rightly pointed out that the ‘worldwide trend of food price increases shows external international factors have the potential to have a much more significant impact on food pricing than the level of competition in the New Zealand grocery industry’.

“As we’ve reiterated throughout our response to the global inflation crisis, which thankfully now seems to be contained, the prices New Zealanders pay for food are largely determined by global factors,” says Quin.

“Much of the food we stock is imported, so our shelf prices are pushed up by the costs of shipping it here and trucking it around the country. Likewise, prices for domestically produced food are impacted by global commodity prices, such as those for fertiliser, and what the world is willing to pay for New Zealand dairy, meat and fruit.

“As the Grocery Report also noted, the rate of costs our suppliers pass on to us, and therefore consumers, peaked at over 10% per annum at the end of 2022 and has been decelerating since then, but is still averaging over 2% per annum – with the cost of popular goods like olive oil, cocoa and orange juice still well up.

“That’s significant given that the cost of buying products from suppliers accounts for around two-thirds of the retail shelf-price, while both Foodstuffs co-ops’ net profit after tax has averaged less than four cents per dollar over the past five years.

“We’ve been working hard to mitigate those supplier cost rises by continuously seeking better deals from our freight and fuel providers, and from multinational suppliers too, including sourcing alternative products at better prices and/or asking them for ‘trade spend’, which typically involves short-term discounts we can then pass on to customers while also selling more of their goods. All so we can keep delivering value and keep the cost of living down.

“Our co-ops made the decision to fight inflation because we knew it was one of the best ways we can use our reach and expertise to help New Zealand. Because of our significant role in the wider economy, we knew we could have an influence on the overall rate of inflation.

“That effort was reflected in parts of last week’s Grocery Report. Specifically, that since January New Zealand’s food price inflation rate has not only been lower than Australia and the UK; but also lower than inflation for rent, energy, insurance and telco services in New Zealand.

“The report said last year’s volatility in fruit and veggie prices was ‘at least partially’ due to the extreme weather of early-2023. I’d go further and say last year’s spike was predominately due to those cyclones, and why last month’s prices for crown pumpkins, orange kumara, celery, and brown onions were around half their price a year ago.

“I’d add that both Foodstuffs co-ops have increased our emphasis on ‘everyday low pricing’ since the Market Study, and less on short-term promotions, as just one way we’re making it easy for customers to get the lowest prices on products they want.

“We’re also providing a low-cost grocery option for budget-conscious shoppers via our 58 PAK’nSAVE stores, whose advertised prices for the top 50 most frequently shopped items are consistently cheaper than our main competitor’s, bringing robust competition to 31 towns and cities around New Zealand, serving 1.8 million customers every week,” Quin concludes.

Notes:

Methodology

Stats NZ measures food price inflation by tracking the prices of individual items that make up a representative food basket. Foodstuffs measures the prices of a basket of products in the same categories that Stats NZ monitors for food inflation, applying the same weighting and methodology to calculate a year-on-year rate for both retail prices and supplier costs, comparing the latest month with the same month one year earlier.

Headline stats for latest month (all figures year-on-year)

• Stats NZ’s food price index was up 0.4% in the 12 months to August 2024
• Foodstuffs data for a basket of products in the same categories Stats NZ monitors for food inflation, show, on average:
  • Retail prices across its stores were 0.1% higher than in August 2023
  • The cost of supplied goods was 2.6% higher than in July 2023
• Latest Infometrics-Foodstuffs NZ Grocery Supplier Cost Index (GSCI) shows the ‘list price’ suppliers charged the co-ops across 60,000 goods rose 2.3% p.a. in August (vs. 2.4%pa in July)

© Scoop Media