Latest grocery data shows inflation is 'persistent and pervasive' - economist Brad Olsen

A leading economist has a grim forecast for Kiwis as the latest grocery data shows inflation is "persistent and pervasive".

The Infometrics-Foodstuffs grocery supplier cost index (GSCI) showed supermarkets are paying suppliers 10 percent more than the same time last year. 

The data also shows in October 2019, the number of products increasing in cost was 1834. That jumped to 9027 items in the same month this year.

Infometrics principal economist Brad Olsen told AM on Monday he was surprised by the level of increases. 

"I think what's surprising is we're seeing these sort of levels, not only of increases coming forward but also the number of increases that have come forward with those costs in recent times," Olsen told AM Early host Oriini Kaipara.

"I say that because I think we're all desperately looking for some relief, some better news on the horizon." 

Olsen said supermarkets are paying more for items like fresh produce, meat and frozen goods. 

"We can't control the weather and we know that produce prices are a lot more volatile," he said. 

"It's the other groceries, some of your more basic goods - tinned foods for example - that are also going up and cost and have gone up over nine percent over the last year." 

Olsen said these increases paint a bad picture for inflation. 

"All of that sort of puts the pressure on and indicates that inflation is both persistent and pervasive," he said. 

"It's across the board and it's sticking around and it's now starting to spill out into those other areas of people's shopping journeys." 

Statistics New Zealand will release the latest food price index for October on Friday and Olsen believes it will show high levels of food inflation.

"Given those supply costs are a main contributor to how much consumers are going to pay for what they put in their trolleys, we are expecting that food price numbers out later this week will still show higher levels of food inflation," he said.

With food prices increasing, Olsen didn't have good news for Kiwis hoping for a bit of respite at the checkout.

"It does seem very dependent on those input costs from suppliers and I guess the worry we have at the moment is we're now such a long way in our inflation journey in New Zealand and across the world, yet we're still seeing no real respite yet. We're not seeing any turning point or things starting to get better," he said. 

Annual inflation is currently sitting at 7.2 percent, down slightly from its June peak of 7.3 percent but significantly higher than the Reserve Bank of New Zealand's (RBNZ) 1 to 3 percent target.

Olsen believes it might be a while until New Zealand gets inflation under control. 

"We also know that domestically-based inflation here in New Zealand is running hot. We know that wages are running at record levels and that we know a number of operators are still finding it difficult to find staff," he said.

"It does mean that there are some areas that we have more control over that are still showing intense inflationary pressures, until we get that under control, we're not likely to see inflation turn around any time soon." 

Watch the full interview with Brad Olsen above.