The Warehouse drops price of basic groceries as cost of living skyrockets

With record-high inflation and the cost of living skyrocketing many retailers are increasing their prices - but one is bucking the trend. 

The Warehouse announced on Tuesday it would be dropping the price on several key grocery items.

The Warehouse Group CEO Nick Grayston said with the cost of living increasing "every dollar needs to go as far as possible", which is why it is reducing the prices for several items. 

From now on a two-litre bottle of milk is $3, 500 grams of Tararua butter is $4 and 1.2kg of Sanitarium Weet-bix is $5 at Warehouse stores. 

Grayston said they are the cheapest everyday prices available in New Zealand and more drops can be expected in the coming months. 

"Our customers trust us to provide the best value for money and we're committed to this. Kiwis know they can come to The Warehouse for the best deals on their household essentials.

"Value isn't just about low prices – by providing quality products across all of our categories, our customers can feel confident that the range of options we provide will last longer, and provide better value for their money in the long run."

Newshub compared the new prices to products available at Countdown, PaknSave and New World. The cheapest two-litre milk available at Countdown is Countdown standard milk coming in at $3.91. At PaknSave the cheapest equivalent milk is the value standard milk at $3.91 and New World is the Value standard milk at $3.96. 

The price drops come after The Warehouse extended its offering to include pantry items such as flour, dried fruit, nuts and sauces. 

Grayston said more products will also be available in the coming months. 

Record inflation, rising interest rates, staff shortages and supply chain issues is causing the cost of living to skyrocket with Prime Minister Jacinda Ardern labelling it a crisis earlier in the year. 

It comes after a recent survey found 90 percent of all retailers are looking to bump up their prices by 7.5 percent. The increases were prompted by COVID-19, minimum wage increases, the doubling of sick leave and never-ending global supply chain issues.

High grocery prices are also under the spotlight after a Commerce Commission report into the sector found competition is "not working well for New Zealand consumers" with smaller retailers unable to compete effectively against the two main players.

The Commission made a slew of recommendations to fix the issue including changing planning laws to free up land for new grocery stores, introducing a code of conduct for relationships with suppliers, and establishing an industry regulator.