Foodstuffs Co-Ops Again Soak Up Supplier Cost Rises To Help Tame Inflation

• Foodstuffs co-ops again soak up supplier cost rises to help tame inflation
• · Stats NZ’s food price inflation measure increases 0.6% p.a. in the 12 months to July 2024 
• · Foodstuffs’ retail prices increase 0.7% p.a. in the co-ops’ comparable basket 
• · Supplier costs in the comparable basket rise 3.2% p.a., vs. 2.4% p.a. for wider GSCI basket

The Foodstuffs grocery co-ops are continuing to keep the rate of price increases at their stores below the rate of supplier cost rises, as part of their efforts to help New Zealand tame inflation.

The two co-ops, whose member-families own the country’s 500+ PAK’nSAVE, New World and Four Square stores, have recorded a fifth consecutive month of retail prices rising more slowly than supplier costs, for a basket of products in the same categories Stats NZ monitors to measure food price inflation.

In the latest month, July 2024, the Foodstuffs co-ops recorded an average retail price increase of 0.7% year-on-year for the comparable basket, while Stats NZ’s nationwide rate was 0.6% p.a.

Over the same period, the co-ops’ costs to purchase their basket have risen by 3.2% on average – the tenth consecutive month Foodstuffs’ supplier costs have outpaced retail price increases.

Foodstuffs NZ Managing Director Chris Quin says the data shows the co-ops’ are continuing to play a part in helping to tame inflation for New Zealand.

“Just this week we saw the Reserve Bank cutting the Official Cash Rate, recognising that the heat has come out of consumer price inflation, which is now only slightly above the Bank’s target maximum of three percent,” says Quin.

“Helping to bring that overall rate down is the fact that food price inflation is now very low and has been sustained under one percent since March.

“At the same time, and perhaps reflective of the inflationary pressures in our economy and globally, supplier cost rises are still averaging around three percent over the past five months.”

Earlier this week, the latest Infometrics-Foodstuffs Grocery Supplier Cost Index showed supplier costs across a wider set of 60,000 products had increased 2.4% p.a. for the year to July.

Quin says the ongoing difference between supplier cost and retail price increases shows the Foodstuffs co-ops are focused on cost efficiencies and not passing on the full effect of inflation to customers.

“We’re doing everything we can to keep prices low, not just so customers keep coming back but also so households can afford the essentials, and so our wider economy can get back on track.”

Deflation continues for many seasonal crops

In more abundant supply, and seeing significant year-on-year price deflation as a result, are many fresh seasonal vegetables – accounting for nine of Foodstuffs’ top-ten price falls shown in the table below:

Other staples that saw price falls included eggs, Pams canned tomatoes and canned spaghetti (down 15% p.a.) and Pams cheese, wheat biscuits, and shoulder chops (all down 12% p.a.)

On the flipside, Foodstuffs’ produce experts say growers of covered crops like tomatoes and capsicum are at risk of rising power costs to heat their glasshouses during the winter months.

“The cost of electricity in New Zealand is again emerging as a supply-side factor when it comes to inflationary pressures,” says Quin. “I think as a nation we must put greater emphasis on ensuring we consider the long-term effects of underinvestment and getting the settings right.

“More immediately, our Foodstuffs buyers are closely monitoring current events in the Middle East and Europe to mitigate the risk of disruptions if there’s any escalation in the conflicts there.

“But it’s all in a day’s work for our buyers and wider team of 39,000 Foodies – getting food and essentials to our stores and customers, and at the best prices, is what New Zealanders trust us to deliver, and have done for over a century, and it’s what we’re proud to be doing.”

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