Price rises for grains, flour and potatoes underpinned high costs for supermarket bakeries and chilled foods during June, the Foodstuffs co-operatives report.
However, the rate of increase in suppliers’ charges for goods to supermarkets is moderating, according to a monthly survey conducted by Infometrics and commissioned by Foodstuffs.
Infometrics chief executive and principal economist Brad Olsen said food prices are still rising but the rate of increase is slowing.
Olsen said monthly increases in the past three months have been less intense than the considerably larger rises in late 2022, but they are still about triple the monthly rate seen pre-pandemic.
“It’s important to stress that actual costs aren’t falling overall – far from it – but cost increases aren’t as fast-paced as they have been before, a sign of easing pressure on costs generally.”
The Grocery Supplier Cost Index (GSCI) was 8.5% in June compared with a year earlier, which was an improvement on the 8.8% recorded in May.
“Global food prices have improved and increases in imported food costs have moderated since the start of 2023,” Olsen said.
“Domestic food input costs are still showing a trend of rising costs, but at a less intense rate than previously.
“Imported food prices rose by 13% per annum in the first quarter of 2023, a slower pace than the 26%pa recorded at the end of 2022.”
When drilling down into departments within supermarkets and different food categories, bakery costs rose the most month on month, with larger rises in chilled foods and grocery too.
“The chilled food increases were driven by higher costs for dairy and chilled meats, and the rise in grocery costs was driven by larger cost increases for grains, chips, and noodles items.”
World food prices fell a further 3.5% in June, according to the World Bank commodity price index.
After broadly stagnating since mid-2022, there now appears to be a trend of falling food prices, with world food prices down 5.6% over 2023 so far.
Oils and meats prices were down the most, falling 4.9% in June, to be sitting 14% lower over 2023 so far.
Meanwhile the government has appointed the country’s first grocery commissioner, former Sanitarium general manager Pierre van Heerden.
Commerce Minister Duncan Webb said Van Heerden is an experienced chief executive and board member, with deep knowledge of the grocery industry in New Zealand, Australia and the United Kingdom.
He will also join the board of the Commerce Commission.
Both the minister and the new commissioner said the priorities of the new role will be opening up wholesale channels to smaller competitors and banning restrictive land covenants that lock up the best supermarket locations.
There will also be a dispute resolution service for suppliers and wholesale customers of major supermarkets.