The steep price of groceries is not expected to fall any time soon thanks to increasing cost pressures on those supplying supermarkets.
An index measuring the change in costs that suppliers charge for products to the Grocery Cooperatives shows an increase of 8.7 percent in the year to August.
The Infometrics-Foodstuffs New Zealand Grocery Supplier Cost Index also shows nearly three times the number of products that have become more expensive compared to the same month in 2019, before the pandemic.
Supplier costs represent two-thirds of the price of groceries on the shelf in supermarkets.
Infometrics chief economist and director Brad Olsen said supplier cost increases remained broad-based across product categories.
“Continued higher input costs are driving suppliers to pass on these higher costs,” he said.
“The continued increase in both the number and magnitude of cost increases from suppliers to supermarkets underscores the ongoing mounting pressure on food prices in retail stores.”
In August, 9.4 percent of products increased in costs by more than 20 percent, compared to 6 percent of products in 2019.
Olsen said suppliers also faced continued rising labor and import costs.
“The Farm Expenses Price Index has risen at the fastest rate since its inception in 1993, and food and beverage import prices have risen the fastest since 1985,” he said.
“Increasing cost pressures, both nationally and internationally, are putting pressure on suppliers across the board.”
He said the momentum in supplier cost pressures suggests supermarket costs and broader inflation measures will remain elevated for the time being.