Cost of living crisis: Higher packaging costs a factor in supermarket price rises - economist

By RNZ

High supplier costs are adding to increased prices at the supermarket, an economist says.

Infometrics chief executive and principal economist Brad Olsen said its Grocery Supplier Cost Index showed a 10.3 per cent increase in what supermarkets were charged for goods in March 2023 compared with March 2022.

“What we are seeing through the numbers is that supplier costs continue to rise and have now seen an annual increase of 10 per cent or more for the last six months so it reinforces the inflationary pressures that we continue to see across the economy,” Olsen told Morning Report.

“Certainly in the last few months we have seen a number of produce items also go up considerably.”

This included apples and kūmara following Cyclone Gabrielle.

Across the supply chain, Olsen said prices were going up. Suppliers were facing more costs and it was making its way down the chain to consumers.

Fuel prices and wage bills were part of the increase but materials had also increased, he said.

Packaging was nearly 10 per cent more expensive than it had been last year.

“It’s not only the goods that you are trying to buy at the supermarket, it’s what they are wrapped in or packaged in or boxed around.”

Olsen said the supplier cost increases were wide-ranging, but product costs for FoodStuffs were up more than 20 per cent from last year.

“Frozen foods and grocery goods also saw an acceleration in supplier costs, with dairy products, frozen vegetables, breads, petfood, and eggs all seeing larger increases.”

The Infometrics-Foodstuffs New Zealand Grocery Supplier Cost Index (GSCI) measures the change in the cost of grocery goods charged by suppliers to the Foodstuffs North Island and South Island co-operatives.

It uses Foodstuffs NZ data across over 60,000 products the company buys. Foodstuffs NZ has the New World, Pak’n Save and Four Square brands.