The Foodstuffs grocery co-ops have recorded another month of the average retail price rise at their stores that’s lower than Stats NZ’s national average, but ongoing spikes in the price of popular imports like cocoa and olive oil continue to put upward pressure on checkout prices.
While Stats NZ’s latest food price inflation rate was 1.2% in October, year-on-year, the two co-ops recorded an average 1.0% increase YOY for their comparable basket of goods.
Produce growers helped keep both inflation rates down, with Foodstuffs recording 11.4% deflation in the fruit and vegetable category compared to October 2023.
The two co-ops’ member-families individually own and operate more than 500 grocery stores around NZ, including PAK’nSAVE, New World and Four Square. Since mid-2022 they’ve been tracking the average rate of price increases at their stores in the same categories Stats NZ monitors, and October was the eighth consecutive month both rates were around 1% or below.
The result follows Stats NZ reporting last month that overall consumer inflation was just 2.2% in the year to September, the lowest since March 2021, before inflation took off due to Covid.
Foodstuffs NZ Managing Director Chris Quin says it’s encouraging to see food price inflation still lower than general CPI on an annual basis, with the Foodstuffs co-ops having played an important part.
“Our fight against food price inflation at our stores has not only been helping customers with the cost of living but has also helped get overall CPI back within the 1-3% target range,” says Quin.
Key factors contributing to the Foodstuffs co-ops’ average annual rise in food prices of 1.0% were a -11.4% fall in produce in that period, and -3.2% decrease in milk, cheese and eggs; versus a 3.6% increase in general grocery foods, and 6.1% increase in non-alcoholic beverages.
“Those last two categories include several items that have seen significant price spikes this year due to overseas shortages, including olive oil, which is 88% higher than a year ago, and beverages such as drinking chocolate, orange juice and instant coffee, which are still at or near record levels.
“Fortunately, this is balanced by our mostly domestically sourced fresh food categories, with the produce category seeing deflation, on average, compared to October last year.”
Foodstuffs NZ figures for the five foods that were down the most in October year-on-year were:
1. Orange kumara –58%
2. Crown pumpkin –52%
3. Brown onions –51%
4. Celery –38%
5. Carrots –29%
Foodstuffs’ produce experts say settled spring weather has delivered good volumes and value, with supplies of covered crops like tomatoes, cucumber and capsicums now starting to build, and berries and stone fruit making an early appearance ahead of the festive season.
“The Hawke’s Bay nectarines being harvested now is the first good crop to come out of that region since Cyclone Gabrielle devastated the trees there nearly two years ago, which shows how long the impact of extreme weather can last,” says Quin.
Offshore, Foodstuffs’ freight experts say the global supply chain remains strained, with shipping costs increasing largely due to the ongoing Red Sea attacks. The current cost per TEU (twenty-foot container equivalent unit of cargo) is up 27% on this time last year.
“Domestically, there are some issues around rail interruptions in the North Island over the peak trading period, impacting how and when we’re able to move freight,” says Quin. “Business costs such as freight account for around 15-16 cents per dollar of the retail shelf-price of goods.”
Stats NZ’s FPI rate of 1.2% and the Foodstuffs rate of 1.0% for its comparable basket, are both lower than the 2.6% average rise in what suppliers charged the co-ops for that basket; and the 2.0% average rise in what suppliers charged across the co-ops’ wider range of 60,000 products.
“While those amounts are all within the target range for inflation, with supplier costs accounting for 67-68 cents per dollar of the retail shelf-price, even a 3% annual increase slowly adds up when applied across a household’s full weekly shop.
“That’s why our co-ops won’t be taking our eye off the ball when it comes to the inflation fight. For us, that means continuing to find value from suppliers at home and abroad and running our co-ops as efficiently as possible so we can pass those savings on to customers.”
• Stats NZ records 1.2% food price inflation in October 2024, year on year, while Foodstuffs co-ops recorded 1.0% average retail price increase in their stores YOY in comparable basket
• Deflation for produce offset by significant rises for olive oil and beverage imports
• NZ continues to benefit from one of the lowest rates of food price inflation in the OECD
