The pace of supplier cost increases to Foodstuffs supermarkets slowed further in February, with the Infometrics-Foodstuffs New Zealand Grocery Supplier Cost Index (GSCI) showing an average 1.8% increase in what suppliers charged in February 2025, compared to a year earlier.

“February’s 1.8%pa increase is the slowest annual gain recorded since July 2021, and the first time below 2%pa since August 2021. Importantly, this increase shows supplier costs are still rising, but at a slower pace than previously,” said Infometrics Chief Executive and Principal Economist Brad Olsen. “As we’ve said recently, despite current volatility, the annual increase in the Index continues to trend around 2.0%pa.”

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.

“Higher costs for bakery and chilled foods continue to drive overall cost trends,” said Mr Olsen. “In February, bakery cost increases remained high, at 3.7%pa, followed by chilled foods, which saw a 3.6%pa gain, up from 3.3%pa in January. Rising butter costs were key to this increase, as well as cream and milk, with global dairy prices still up 15% on last year. Chocolate and coffee costs also noticeably rose, due to global cost increases, while noodle, spaghetti, and baked bean costs also recorded a cost increase, affecting the grocery category gain.”

Month on month, just under 2,500 products increased in cost in February 2025 compared to January. This result was the lowest number of February increases counted since 2021, after the same occurrence in January. “February saw a lower number of cost increases for produce and grocery items than other recent February months,” said Mr Olsen. “More broadly, looking at all supplier cost changes in February, there were a larger number of small cost decreases – mostly for produce – and of larger increases – mostly for general grocery products.”

“Overall cost pressures appear more settled at present, with produce in particular showing more usual seasonal patterns, and less upward pressure as on-farm costs stabilise,” said Mr Olsen. “Imported costs remain a worry, with a small but significant number of overseas-sourced products showing higher costs, and cost increases of a larger magnitude. Global prices for New Zealand-grown dairy and beef are also sitting higher.”

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.