Chris Quin, CEO of Foodstuffs North Island. Photo / Michael Craig
Chris Quin, CEO of Foodstuffs North Island. Photo / Michael Craig
Supermarket operator Foodstuffs says a complex combination of local and international trends is behind the ongoing rise in grocery prices.
Fresh data from StatsNZ today showed food prices rose 8.3 per cent in the year to September.
The rise matched the annual increase to the end of August and maintainedthe rate of increase at a 13-year high.
The 8.3 per cent leap for the year to August 22 (compared with August 2021) was the biggest annual increase since the Global Financial Crisis in July 2009.
The surge in prices has been described as a perfect storm by economists.
A combination of pandemic supply issues, the war in Ukraine, labour shortages and tough local growing conditions have combined to put the squeeze on consumers.
StatsNZ said the annual increase was due to rises across all the broad food categories measured.
Compared with September 2021, grocery food prices increased by 7.7 per cent and fruit and vegetable prices were up 16 per cent.
Meat, poultry and fish prices increased by 6.7 per cent.
"Increasing prices for yoghurt, two-minute noodles and tomato-based pasta sauce were the largest drivers within grocery food," StatsNZ consumer prices manager Katrina Dewbery said.
The second-largest contributor to the annual movement was fruit and vegetables. The items within this group that influenced this movement the most were capsicums, tomatoes, and broccoli.
Global food growers, makers and retailers were facing "the most complex set of headwinds in decades" which were "continuing to impact supply and push up prices," said Foodstuffs NZ managing director Chris Quin.
Quin has just returned from the US and Canada, where he met with other major grocery retailers and discussed approaches to the global price challenge.
"We're all facing the same set of challenges driven by the three Ws - war, wages and weather. We're also seeing the same changes in consumer behaviour, where value is now king," he said.
Supplier cost increases to Foodstuffs (based on the Food Producers Index) had outstripped inflation in the past month, he said.
"The latest analysis shows that our work to fight inflation for our customers is paying off. It also shows the extent to which we're absorbing record cost increases, so that we're not passing them all directly on to customers in the retail price on the shelf."
On a monthly basis, food prices rose just 0.4 per cent in September. However, after seasonal adjustment, they were up 0.9 per cent.
That adjustment reflected the fact that the nominal spring drop in fruit and vegetable prices had been smaller than usual, StatsNZ said.
While the monthly rise was stronger than many economists expected, it was not enough to shift expectations that overall consumer price index inflation has now peaked.
New Zealand's Consumers Price Index inflation rate was 7.3 per cent for the year to June 30.
For the September quarter figure, due on Tuesday, Westpac and ANZ economists are now forecasting 6.9 per cent and 6.6 per cent respectively.
That dip in topline inflation is likely to be underpinned by the fall in global oil prices flowing through to consumers.
"That would still leave us with a picture of consumer prices that are continuing to charge higher, with annual inflation running close to multi-decade highs," said Westpac chief economist Michael Gordon.
A trolley of groceries at Countdown Supermarket, Quay Street. Photo / Sylvie Whinray
"The September quarter saw particularly large increases in food prices and housing-related costs. Those increases were only partially offset by the easing in fuel prices."
Measures of core inflation were likely to remain elevated, consistent with the ongoing pressure on wages and other operating costs, as well as the resilience in demand, he said.
"All up, next week's inflation report is unlikely to contain the evidence needed to convince the RBNZ that underlying inflation has turned the corner," said ANZ economist Finn Robinson.
