NZ food price inflation is lower than other countries like the UK and the US, says Foodstuffs boss Chris Quin. Photo / Getty Images
NZ food price inflation is lower than other countries like the UK and the US, says Foodstuffs boss Chris Quin. Photo / Getty Images
Opinion by Chris Quin
OPINION:
Claims made by Ernie Newman in his opinion piece regarding the performance of our supermarkets are false, ignore the reality of the complex headwinds driving inflation, and are not supported by data and evidence.
We know from our customers that the rising cost of living and beingable to afford their weekly shop is their number one concern.
Our co-operatives remain laser-focused on helping our customers fight inflation and find value in their household budgets in the face of rising costs.
Our data and insights team are tracking and comparing our price increases against food price inflation each month, so that customers get a full picture of food cost changes and what’s driving them. Our stores have held price increases to customers below inflation and below supplier cost increases for the last eight months in a row since May 2022.
Stats NZ Food Price Index (FPI) shows food prices increased 11.3 per cent for December 2022 compared to a year ago, the biggest annual increase since April 1990.
In December, the average cost increase from suppliers to the Foodstuffs co-operatives on the same products measured in the FPI basket was 12.2 per cent. There were 30 per cent more cost increases in December compared to the same time last year.
On the same products, the retail price increase to Foodstuffs customers was 9.8 per cent - meaning the co-operatives’ members held prices in their stores at 1.5 per cent less than inflation in December, and 2.4 per cent below cost increases from suppliers on the FPI basket.
This analysis shows the heavy lifting we are doing for customers to absorb record cost increases so we’re not passing them straight on to customers in the retail price on shelf.
We’ve done this by staying focused on delivering value within the 19 cents of every dollar on shelf we’re responsible for. That means buying well to get products at a fair price and running our stores and supply chain as efficiently as we can to keep costs down in the business.
It’s worth noting that New Zealand food price inflation over the past 12 months has also remained lower than in the most competitive grocery markets (US and UK) - with food price inflation in the UK reaching 16.7 per cent in the four weeks to January 22.
The column completely ignores the underlying drivers of inflation.
Food prices have been impacted by significant headwinds over the last year. The impacts of inflation both here and internationally, global conflict, supply chain pressures, high oil and commodity prices, labour availability, weather and more are making things challenging for everyone growing, manufacturing, and retailing food in New Zealand.
Chris Quin, managing director of Foodstuffs. Photo / File
Domestically, input cost pressures are continuing for suppliers who are facing higher costs to grow, pick and pack produce for market, with adverse weather events still the wild card this year.
The largest component of shelf prices is the cost of goods from our suppliers – around 68c in every dollar.
The Infometrics-Foodstuffs New Zealand Grocery Supplier Cost Index (GSCI) was introduced in August 2022 to measure the change in the cost of grocery goods charged by suppliers to the Foodstuffs North and South Island co-operatives. The latest Index shows the continuing pressure on supermarkets’ costs from record supplier increases, up 10.6 per cent per annum in December.
The GSCI shows the sustained broad-based input cost pressures suppliers are continuing to face, and the extent to which we’ve been absorbing these record increases from suppliers. In December, produce supplier cost increases were up 24 per cent per annum as weather-related and other factors contributed to lower supply and higher costs across a number of items.
In the face of rising costs, customers are re-evaluating where they shop and what they buy. Value will remain king for them and retailers will have to compete hard.
