Brad Olsen says latest grocery data shows 'light at end of the tunnel' as supply costs rise 5.4 percent

A leading economist warns grocery prices are still a "challenge" for many New Zealand, but added there is light at the end of the tunnel for Kiwis battling the cost of living crisis. 

The latest Infometrics-Foodstuffs New Zealand Grocery Supplier Cost Index (GSCI) released on Monday showed grocery prices had increased 5.4 percent in October, but continues a downward trend. 

The 5.4 percent figure is down from a 6.1 percent rise in September, 6.6 percent in August and 7.5 percent in July, marking the eighth consecutive time the figures have slowed month-to-month.  

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

Infometrics principal economist Brad Olsen told AM on Monday the rise in October is the slowest increase in 19 months (since April 2022), but costs remain higher than before inflationary pressures started pushing up prices.  

He told AM co-host Ryan Bridge some areas are starting to get cheaper but it's not "across the board".   

"It's still going to be a challenge for a lot of people, but this is the slowest increase we've seen in quite a while and in particular we are seeing the likes of produce costs that are actually falling in some areas," he said.   

"That's what would normally happen at this time of year with those seasonal patterns. We saw that particularly with the likes of some of your salad items, lettuce, cucumber, tomatoes, but of course you go back 12 months and those seasonal prices were still a lot higher than they would usually have been... but you're not seeing those frantic increases that we were seeing sort of at the end of last year, the start of this year.   

"It's progress. It's certainly not cheaper, but it's not quite as intensely upwards in terms of those costs and those eventual prices as we've been seeing before."   

Why some areas were cheaper and others were more expensive was largely due to whether it was a domestic or international good, Olsen explained. 

He told AM the New Zealand dollar is in a weaker position than it has been previously, making importing goods more expensive - as well as the cost of fuel being much higher.   

"I think that's what we saw when we dug into the numbers for October. We saw that for the likes of broader grocery items, there was quite a sustained increase. That was across things like potato chips, it was noodles, it was cooking oils, but also laundry powder, all things that are fairly important for a lot of households," Olsen said.   

"But again, that's something we can't influence quite as much ourselves; we're still seeing those pressures more broadly."

Brad Olsen told AM grocery prices are still a "challenge" for a lot of people.
Brad Olsen told AM grocery prices are still a "challenge" for a lot of people. Photo credit: AM

The figures showed over 5500 items increased in cost, more than triple the estimated 1600 products that rose in price in October 2020, according to Infometrics.  

Olsen said while thousands of items are more expensive, he told AM there is "light at the end of the tunnel".   

"I think the thing that's sort of most interesting for me is although we're seeing that headline annual growth figure at a slower pace and that is very much good news... it's the fact you've still got over 5000 items each and every month that are costing more. Go back to sort of 2018-2019, the average across that period was like 2000 items a month," he said.   

"You've got quite a lot that are increasing by not as much, but it's still quite a broad increase and I think a lot of households [are] sort of asking are things coming down quickly enough? Probably not, but at least this might point to a little bit of a light at the end of the tunnel." 

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