Nearly 2300 grocery items increased in cost in March
The cost of nearly 2300 grocery items increased in March from the month before, but the overall rate of increase is reducing, albeit slowly, the latest Infometrics-Foodstuffs Grocery Supplier Cost Index shows.
The index tracks the price Foodstuffs pays its suppliers across 60,000 products. Foodstuffs owns the Pak’nSave, New World and Four Square supermarket brands.
“The annual pace of supplier cost increases has now been slowing for 13 months, having moderated from a peak of 10.6% a year December 2022,” Infometrics principal economist Brad Olsen said.
“Grocery supplier costs are still rising on average, but at a much more moderate speed.”
The number of items that increased in cost in March from the month before was close to double the number in March 2021, Olsen said.
Supplier prices make up about two thirds of the price paid by consumers.
The annual increase in the average cost of goods that suppliers charged supermarkets was 3.2% in March – the 13th month in a row that the annual increase has slowed.
In March 7.1% of monthly changes were rises between 20% and 40%, compared with 5% of cost changes being this large in 2021.
Olsen said price increases were on the rise but at a slower pace than previously.
Dairy items and chilled foods, the likes of frozen vegetables and potato-based items such as chips, have experienced price hikes.
The annual increase of 3.2% on average was down from 10.6%, recorded at a peak in 2022, he said. “That is definitely a better number but also highlights that the new normal, if it is starting to appear, appears to be a higher normal than what it was before inflation.”
Before mid-2021, most months had fewer than 2000 items increasing in price, but the current figures could point to a normal post-pandemic, Olsen said.
It was unclear what was still causing costs to increase, Olsen said. Diesel prices had been fairly stable in recent months although oil prices were starting to rise again globally, and shipping prices globally had started to pull back a bit.
New Zealand typically experienced a delay in cost increases flowing through the system compared with the rest of the world, so it could still be experiencing the effects of recent years – or not quite yet experiencing the full effects, he said.
Figures in the months ahead would give a clearer picture, Olsen said.
Retail commentator Chris Wilkinson said the slowing in the rise in the cost of groceries items was encouraging, especially in the context of the weakening New Zealand dollar, which has been challenging many manufacturers and distributors, given most grocery products have some imported content.
Stats NZ data showed food prices were up 2.1% in the year to February, significantly lower than the 12% increase over the 12 months to February 2023, driven by cheaper fruit and vegetable that helped rein in the rate of increased.