Countdown freezing prices on 500 essential items over winter

Countdown.
The prices of a variety of winter staples will be frozen. Photo credit: Newshub.

By RNZ's Checkpoint

One of New Zealand's largest supermarket chains is temporarily freezing prices on 500 items in response to what's being called a cost of living crisis.

Countdown says it has identified a variety of winter staples including tinned tomatoes, butter, cheese, sugar, flour, shaved ham and more.

Whatever price they are on May 9 is the price they will stay at for the winter months, no matter what happens with inflation.

Recently the chief executive of Countdown's parent company Woolworths said it was simplistic and unfair to blame supermarkets for increases in prices.

However, a Commerce Commission report released in March found there is a lack of competition in New Zealand's grocery market, prices appear high by international standards and it estimated the two main players are making about $430 million dollars in excess profits each year.

"There's no doubt it's tough out there," Countdown's packaged goods and everyday needs commercial director Steve Mills told Checkpoint.

"We're all paying more for fuel, transport, raw commodities, labour, particularly in the farming community - animal feed, fertiliser, export charges."

On average Mills is seeing price increases from suppliers of about 9 percent. Countdown has received about 1000 price increases in the past 10 months, he said. That is more than double what the supermarket saw last year.

"What we're seeing is shipping rate increases up 640 percent, fuel costs up 30 percent and these all affect pretty much everything we sell. 

"We are working very closely with our suppliers and they are being very proactive about how we can both try and absorb cost, price increases and mitigate those where we can. 

"So we try to pass on the least amount of increase as we possibly can to our customers.

"Sixty-three cents in the dollar of the price we're getting from suppliers is made up of raw materials, packaging, freight costs.

"We're at 2.4 percent profit in our business, yes, we are high volume, but we're a very low margin business."

Regarding the Commerce Commission's finding of $430m in excess profits per year for the supermarket chains, Mills told Checkpoint all he sees is the 2.4 percent.   

"Making profit is not a bad thing. We're investing $1 billion over the next couple of years in infrastructure," he said.

That includes making distribution centres more efficient, building new stores, refurbishing existing ones and upgrading the supermarket's digital platform.

But Mills said he appreciates that might not mean much to people struggling to buy a block of cheese.

"That's why we have announced today... effective from May 9, that we're doing a great price freeze on our winter products.

"We're making sure that a person can come in and shop their weekly shop across these products.

"That'll get us close to Christmas and obviously Christmas brings a different product range that customers are looking for as we move more into spring and summer."

The supermarket's press release said: "Diced tomatoes, butter, cheese, sugar, flour, shaved ham, hot roast chicken, carrots and pumpkin at the same low price all through the colder months, no matter what happens with inflation and costs."

Mills said Countdown is working with suppliers to assess how long the freeze can go.

RNZ