Cost increases from grocery suppliers to supermarkets continue to accelerate, keeping pressure on retail food prices, with the Infometrics-Foodstuffs New Zealand Grocery Supplier Cost Index (GSCI) showing an 8.7%pa rise in August 2022.

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 and South Island cooperatives.

“This Index tracks what it costs supermarkets to buy the goods to put on the shelf,” says Infometrics Principal Economist and Director Brad Olsen. Previous analysis shows that supplier costs are the major component of supermarket prices, representing two-thirds of the on-shelf price.

“Cost increases from suppliers remain broad-based across product categories. Almost three times the number of products increased in cost than for the same month in 2019, with larger increases being seen across a wider group of these products. In August 2022, 9.4% of products rose in cost by more than 20%, compared to 6.0% of products in 2019,” says Mr Olsen.

“Sustained higher input costs are driving suppliers to pass on these higher costs. The continued rise in both the number and scale of cost increases from suppliers to supermarkets underscores the continued mounting pressure on retail grocery prices.”

Recent data from Stats NZ shows the level of input cost pressures in the economy, which are feeding through to the costs charged by suppliers to supermarkets, and into on-shelf prices. “The Farm Expenses Price Index has increased at its fastest pace since it started in 1993 and import prices for food and beverages have risen at the fastest rate since 1985. Rising cost pressures both domestically and internationally are putting pressure on suppliers across the board” says Mr Olsen.

“The momentum in supplier cost pressures within New Zealand suggests that supermarket costs and broader inflation measures will remain elevated for now.”

ENDS

Note:

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 and South Island cooperatives.

The Index utilises detailed Foodstuffs NZ data, across over 60,000 products, analysed by independent economics consultancy Infometrics to produce the GSCI and publish it on a monthly basis. For more details see www.infometrics.co.nz/product/grocery-supplier-cost-index.