Prices may rise after freeze
Essential food items that have been frozen or reduced by supermarkets will probably be more expensive when the promotion is over, economists say.
Foodstuffs, owner of the New World and Pak ‘n Save supermarkets, announced it would be ‘rolling-back’ the prices of 110 of its most popular items to last year’s prices, from May 16 to August 14.
Foodstuffs’ announcement came after Countdown said it would freeze the prices of more than 600 of its essential items this winter.
But professor of agricultural economics at Lincoln University, Alan Renwick, said although it would help consumers in the short term, the prize freezes and roll back would put further pressure on supermarket suppliers.
‘‘The suppliers will still be feeling these inflationary pressures on them during this time.’’
Pressure would be building on those prices once the promotions and reductions ended, possibly leading to higher prices, he said.
Renwick said the temporary reductions did not tackle the longer term issues in the supermarket sector, which were highlighted by the Commerce Commission.
Foodstuffs managing director Chris Quin said rolling back prices was more than a PR stunt, and Renwick agreed.
‘‘It’s more than a publicity stunt because it’s real, but it’s not addressing the underlying challenges in the sector, about potentially a lack of competition.’’
The Stats NZ food price index for April showed food prices were 6.4% higher in April this year than last.
Grocery food prices were up 6.4%, restaurant and ready-to-eat food up 5.3%, fruit and vegetables up 9.4%, meat, poultry and fish up 8.1%, and non-alcoholic beverages up 2.8%.
Food economist Puneet Vatsa said the perception of lower prices would also encourage shoppers to buy more.
‘‘Many would almost certainly not purchase only the frozen-price items.
‘‘Therefore, it is important to understand what customers are buying and how they alter their purchases to take advantage of the price freeze.
‘‘The benefits to customers will be limited should they continue to pay high prices on regularly purchased items, and pay less for those purchased seldom.’’
Consumer NZ chief executive Jon Duffy said there was no doubt prices would increase at the end of the three-month price reduction and freeze period.