The annual increase in the average cost of goods that suppliers charge supermarkets has slowed further, with the Infometrics-Foodstuffs New Zealand Grocery Supplier Cost Index (GSCI) showing an average 3.2% increase in what suppliers charged Foodstuffs supermarkets for goods in March 2024 compared to a year ago.

“The annual pace of supplier cost increases has now been slowing for 13 months, having moderated from a peak of 10.6%pa in December 2022,” says Infometrics Chief Executive and Principal Economist Brad Olsen. “Grocery supplier costs are still rising on average, but at a much more moderate speed.”

The Infometrics-Foodstuffs New Zealand Grocery Supplier Cost Index (GSCI), commissioned by Foodstuffs New Zealand, measures the change in the list cost of grocery goods charged by suppliers to the Foodstuffs North Island and Foodstuffs South Island co-operatives. The Index utilises detailed Foodstuffs NZ data across over 60,000 products the Foodstuffs co-ops buy to stock in their 500+ stores, making it the largest dataset of its type in New Zealand, to give a real-time view on supplier cost changes.

Every month, the Index tracks what it costs supermarkets to buy the goods to put on the shelf. Previous analysis shows that supplier costs are the major component of supermarket prices, representing two-thirds of the on-shelf price.

“Nearly 2,300 items increased in cost in March 2024 from the month before, close to double the number of items rising in cost in March 2021,” says Mr Olsen. “There was still a higher proportion of larger cost increases, with 7.1% of monthly changes in March 2024 being rises of 20-40%, compared to 5.0% of cost changes being this large in 2021. However, there were also a number of monthly cost decreases, mostly due to seasonal changes in produce costs.”

Department trends in March were similar to February, with almost all departments recording a monthly rise in supplier costs. “Frozen food supplier costs continued to rise, with frozen vegetables and potato products up. Chilled food costs also rose, with several dairy items driving this change,” says Mr Olsen. “Grocery department goods saw further monthly supplier cost increases, but of a smaller magnitude than recently.”

“More items are still increasing in cost compared to the first half of 2021, before higher cost pressures emerged. Current trends suggest that the “new normal” for annual supplier cost increases might be 1-1.5 percentage points higher than before the pick-up in inflation in 2021.”

ENDS

Note:

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

List cost refers to the cost suppliers charge retailers before trade spend is applied; trade spend being any form of discount provided by a supplier to allow their goods to be discounted.

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.