Foodstuffs Co-ops Warn Of Tariff Impacts, As Global Demand For Three Key Commodities Leads Rise In Food Price Inflation

• Stats NZ records 2.3% food price inflation (FPI) in January year on year
• Foodstuffs co-ops report 2.9% YOY increase in retail prices and 3.4% in supplier costs for goods in their comparable FPI basket
• Key contributors include ongoing global spikes in olive oil, butter and cocoa
• Co-ops cautious of potential inflationary pressures due to offshore trade disruptions

The Foodstuffs co-ops say an increase in the rate of food price inflation in January was led by ongoing spikes in key global commodities, with the effects of the US’s new tariffs yet to be seen.

Stats NZ has recorded a nationwide FPI rate of 2.3% in January, year on year, while the Foodstuffs grocery co-ops are reporting a rate of 2.9% for their comparable FPI basket.

Since mid-2022, the Foodstuffs co-ops have been monitoring the FPI rate across their 500+ stores – including every New World, Four Square and PAK’nSAVE – measuring the prices of a basket of goods in the same categories Stats NZ monitors, using the same methodology and weightings.

Stats NZ has this month changed its methodology and weightings, adding delivered meal kits, decreasing the weight of produce, and increasing that of non-alcoholic beverages. Foodstuffs are still working through the associated methodology to be certain of their precise numbers.

Foodstuffs NZ Managing Director Chris Quin says key contributors to January’s rise in FPI were the ongoing price spikes in three global commodities: olive oil, butter and cocoa.

“January’s 2.9% average across our stores for goods in our FPI basket was lifted by year on year increases of 90% for olive oil, 52% for butter, and 31% for drinking chocolate,” says Quin.

“Those spikes are a reminder of how much food prices in New Zealand are influenced by global market forces, with all three in short supply worldwide, and extreme weather a factor in each.

“New Zealanders are not only paying global prices for global commodities, including many foods we grow and make right here, we’re also paying extra to ship it down and truck it around, plus 15% GST, which is one of the highest sales taxes on food in the OECD.”

“Regardless, our two co-ops of more than 500 local business owners are committed to serving their communities, providing thousands of jobs, and keeping food prices down, especially now there’s a risk of inflation due to overseas tariffs and conflicts, as Treasury noted in December.

“New Zealand currently imposes no or low tariffs on most imported food, but it’s possible some imports could be impacted by tariffs elsewhere. For example, if producers are in a country that must start paying more for imported ingredients, fuels or fertilisers.

“On the flipside, if US retail prices go up for foods from tariffed countries, those countries could look to supply other markets like New Zealand, which might mean some lower food prices here. The key message is that some disruptions and distortions can be expected in 2025.

“For now, New Zealand food price inflation is still within the Reserve Bank’s target range of 1-3%, and below the OECD average of around 4%, and Foodstuffs’ retail rate has been lower or equal to Stats’ overall FPI rate in all but four of the past 33 months.”

Specific foods seeing the biggest YOY price decrease in January were orange kūmara (down 60%), brown onions (down 32%) canned spaghetti (down 26%) and green kiwifruit (down 22%).

Foodstuffs produce experts say there was plentiful supply of fruits like cherries, nectarines and peaches, with new season apples arriving several weeks ahead of schedule too.

The co-ops’ freight experts report no major interruptions or price changes in January, but say the fee Auckland container depots charge trucks rose again on February 1st, and diesel is also up.

“Higher transport costs hit all businesses, big and small,” says Quin. “They not only affect what suppliers charge us, which accounts for around two-thirds of the retail price on shelf, they also add to our own costs of doing business, which account for another 16-17 cents per dollar.”

“New Zealand’s not only far from the rest of the world, but also long and thin, with lots of small communities we serve every day. One way the government can make a difference to the price of food is by investing enough in roads, rail and ferries, and ensuring they’re up to standard.”

Foodstuffs’ supplier costs rose an average 3.4% YOY in January for goods in their comparable FPI basket, up from 3.1% YOY in December – albeit using Stats NZ’s new weightings.

Quin says the co-ops’ focus on seeking value from offshore suppliers on behalf of NZ customers won’t let up in 2025.

“For three decades, New Zealand consumers have benefitted from freer global trade that let us buy from more places, often at better prices. Our local family grocers have been doing that for a century now, forming co-ops precisely so New Zealand can compete on the world stage.

“Regardless of any trade wars or other disruptions, we’ll keep doing what’s necessary to ensure Kiwi shoppers keep getting the foods they love, when they want them, and at the best price.”

Methodology 

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

Headline stats for latest month (all figures for January 2025, year-on-year) 

• Stats NZ’s food price index was up 2.3% 
• Foodstuffs NZ data for a basket of products in the same categories Stats NZ monitors: 
• retail prices across all stores were 2.9% higher 
• the average cost of supplied goods was 3.4% higher 
• Latest Infometrics-Foodstuffs NZ Grocery Supplier Cost Index (GSCI) showed an average 2.1% increase in what suppliers charged, compared to a year earlier 

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