Foodstuffs held price increases below inflation for second month in a row

Foodstuffs held price increases below inflation for second month in a row

With food price inflation remaining at record highs around the world – NZ at 6.6%, Australia at 4.3% the UK at 8.6%, and the US at 10.1% – stores in the Foodstuffs co-operatives have kept price increases for customers below inflation for the second month in a row.

The Foodstuffs North Island and South Island co-operatives are owned by their 460 members – grocers who operate their own individual local stores under the New World, PAK’nSAVE, and Four Square brands around New Zealand.

The Stats NZ Food Price Index (FPI) found that in June the weighted increase of food prices on the FPI basket of goods was 6.6%. The average cost price increase to Foodstuffs from suppliers over the same basket of products in the month of June was 6.8%.

The price of the same basket of goods measured in the Stats NZ Food Price Index increased by an average of 5.5% for customers shopping at PAK’nSAVE, New World and Four Square in June, meaning Foodstuffs stores held food price increases 1.1% below inflation and supplier increases.

In May, retail prices to Foodstuffs’ customers increased 4.7%, 2.1% less than food price inflation of 6.8% and supplier cost price increases of 6.9%.

Foodstuffs NZ Managing Director Chris Quin, said the Global Food Price Index measuring key commodities like sugar, oils, meat and cereals recorded the highest price levels of its 30-year history in March and are 23% up on 2021.

Costs in New Zealand have continued to rise as the global and domestic challenges pushing up the costs of growing, making and retailing groceries remain. International freight costs have risen significantly in the last 6 months, and the standard cost to Foodstuffs in this area has risen from between $500k-$1m to $2-3m per month.

“We’ve seen fuel related price increases for freight adjusted upwards again in June to now sit at over 26% this year. Global supply chain issues, currency changes, skills shortages and increases in the price of equipment and ingredients are still flowing through to price increases with suppliers seeking to recoup higher costs on key inputs such as wheat, sugar, edible oils and meat. Though we have seen less price increases from suppliers in the last month than in May, the average cost price increase on these remains high.

“The rest of 2022 will remain challenging for New Zealand households caught in the middle of inflation pushing many prices up and mortgages going up to push inflation down.

“Accurate data is critical so our customers know we are working hard to deliver value within the 19 cents of every retail dollar on the supermarket shelf we’re responsible for. The latest FPI comparison shows we’re working to keep costs under control, we’re buying well and finding efficiencies in our business to get the best value for our customers. 

“Holding price increases lower than inflation has been a result of the co-operatives’ Price Rollback initiative and an ongoing focus on value. In its first eight weeks, the Price Rollback has saved New Zealanders almost $10 million on everyday essential grocery items like butter and bread. These Rollback savings have been entirely funded by the local grocers who are Foodstuffs co-operative members.

“The extraordinary times we’re in are driving up the price of everything for our customers and our suppliers. From food to fuel, electricity, rent, mortgages, broadband and airfares – inflation keeps broadening. This is out of our control and not related to the issues the Commerce Commission was looking into during the market study.”

Foodstuffs North Island and Foodstuffs South Island are locally owned and continue to invest heavily back into NZ. The Commerce Commission’s final report found that that supermarket returns in NZ were similar to those of other international grocery retailers in highly competitive markets like the UK, America and Europe (Commerce Commission market study into the retail grocery sector final report, page 57).

New Zealand continues to be in the top countries in the world for food security, including affordability, availability, safety and quality in the latest data out from the Economist’s Food Security Index, ranking 16th from 113 countries.

The numbers

  • Stats NZ Food Price Index (FPI) found food prices increased 6.6% for June 2022 compared to a year ago
  • In June 2022, the average supplier cost price increase to the Foodstuffs co-operatives on the same products measured in the FPI basket was 6.8%
  • On the same products, the increase to Foodstuffs’ customers was 5.5% – meaning the co-operatives’ members held prices in their stores at 1.1% less than inflation in June
  • The Foodstuffs co-operatives are responsible for 19c of every retail dollar on the shelf at PAK’nSAVE, New World and Four Square stores, which covers wages, costs, and provides post-tax profit of 4c.
  • The largest component of shelf prices is the price Foodstuffs pays suppliers for goods – 68c in every dollar.
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