Latest grocery data shows good news and bad news as supply costs rise six percent

A leading economist warns grocery prices are "not about to get cheaper" but the latest data did show some good news for Kiwis.  

The latest Infometrics-Foodstuffs New Zealand Grocery Supplier Cost Index (GSCI) released on Monday has increased again with a 6.6 percent rise in August but the figures are on a downward trend.  

This is down from a 7.5 percent rise in July, 8.3 percent in June and 8.8 percent in May and the seventh straight month the figures have slowed month-to-month.  

The figures showed just under 4000 items increased in cost, still considerably higher than about 2500 items that rose in cost in August 2020, according to Infometrics.  

The index tracks how much supermarkets are charged to buy the goods they put on the shelf. 

Infometrics Principal Economist Brad Olsen told AM on Monday the latest data shows some good news and bad news for people at the grocery store. 

Olsen told AM co-host Laura Tupou the "really intense" inflationary pressure that has been seen across New Zealand's economy is still active but not as intense as previously.  

"Prices and costs are still increasing, but not at the same rate. We're still worried, I think about the underlying sort of pressures that are coming forward but what we are also seeing is the economy is slowing," Olsen said.  

"There's not quite as much of an ability to put those cost increases forward and in a lot of ways everything is still expensive, but some of those input costs to suppliers themselves to farmers and similar aren't quite as bad... so a little bit of good news seemingly coming through on the horizon."  

Olsen said frozen foods saw the largest monthly increase in supplier costs and have increased on an annual basis more than produce.  

But while the figures are slowly improving, Olsen said it isn't all good news with a lot of items increasing.  

"The worry is when we look through the figures, although some of those headlines are better, there are still some costs that are still increasing quite a lot," he said.  

"You look through the likes of produce in the likes of lettuce, potatoes, broccoli still increasing, the likes of grocery items as well, pet food and the likes of sauces and other condiments also increasing.  

"So not about to get a whole lot cheaper I don't think when people are going to the supermarket but again, with those supply costs not quite as intense at the moment, we would expect that to perhaps translate through in a month or two, maybe to a little bit less intense pricing on the supermarket shelf." 

Olsen worries the "new normal" might be more intense inflation than what New Zealand is used to.  

"The worry I guess when we've looked at the latest data is there are some areas where there's a little bit more pressure than we'd like to see," he said.  

"The likes of diesel prices, for example, and that's what people are going to be paying to move the goods around the country they're up $0.20 per litre over the last month. You've seen some of those other input prices rising as well.  

"So still worried that although we might be getting better, that sort of new normal might still be more intense inflation than we've previously been accustomed to."

Watch the full interview with Brad Olsen in the video above.