Check out the new watchdog

New Zealand will have a new grocery sector watchdog. So, we’re saved? Not nearly. Consumer Affairs and Commerce Minister David Clark this week announced a Commissioner to be specifically tasked with holding supermarkets to account.

On top of this, a new supermarket code of conduct, aimed at preventing major retailers from using their size to get better deals from their suppliers, was also released for consultation.

But will these new moves shift prices at the checkouts any more than previous noises?

Clark had already tried to make it easier for supermarkets to enter the market by opening up more sites. On Budget night, Parliament passed urgent legislation to make this happen. So far, there’s been little more than a shrug from German giant Aldi in response.

Up until Wednesday, this was the strongest result from a Commerce Commission report, released in March, that found competition was not working at all well for consumers and recommended a suite of changes to increase competition and help improve the price, quality and range of groceries and services available to New Zealanders.

Since the release of the study, the duopoly of the two major supermarket chains, Foodstuffs and Countdown, has been sharply criticised but hardly relented beyond pricing some products back to 2021 levels and a temporary price freeze on a limited range of essential items.

There’s no doubt the pain at the checkout has been getting worse. The attempt to address high food prices was given new urgency as inflation pushed grocery costs sky-high this year.

In March, food prices hit an 11-year high, up 6.8 per cent. The Herald on Sunday last week estimated the cost of a roast dinner and modest trimmings for an extended family has risen 20 per cent in the past three years from $115.31 to $138.43.

Annual wage inflation has dawdled, with an increase to 3 per cent in the March 2022 quarter, up from 2.6 per cent in the December 2021 quarter — the highest level since the March 2009 quarter.

This isn’t entirely the supermarkets’ fault. But, as Consumer NZ chief executive Jon Duffy points out, the sector is taking more than $1 million in excess profits every day. That is a target too tempting for the minister to ignore and he says he wants that shared “more fairly”.

The grocery watchdog will be based within the Commerce Commission.

We will see the law to establish the Commissioner later this year, and only then will we know whether this watchdog has been given any teeth.

Even Clark doesn’t seem to hold much hope, warning a “mandatory backstop” may still be necessary. — NZ Herald