The cost increases from grocery suppliers to supermarkets increased close to 10.6% in December 2022 compared with a year ago, the Infometrics-Foodstuffs New Zealand Grocery Supplier Cost Index (GSCI) showed. The index tracked what it cost supermarkets to buy the goods.
Previous analysis showed supplier costs were the major component of supermarket prices, representing two-thirds of the on-shelf price, Infometrics principal economist Brad Olsen said.
"Local cost pressures and supply challenges, including labour market pressure, interest rates, stubbornly high inflation, and weather, look set to maintain supplier cost pressure into 2023," Mr. Olsen said.
"Supplier costs remain higher than a year ago, across all departments."
"Produce supplier cost increases accelerated to 24% pa, as various weather-related and other factors contributed to lower supply and higher costs across a number of items," Mr Olsen said.
Butchery, seafood and frozen foods supplier costs remained more than 10% higher than a year ago, and broad-based supplier cost increases were also observed in chilled foods and grocery goods over the last year.
However, there was better news on the international front. Shipping costs had eased substantially, global food prices were starting to ease, and fuel prices were also being tempered, he said.
Due to the usual summer cost change moratorium, the number of items increasing in cost in December 2022 was similar to December 2019.
Moratoriums were used by many companies and industries to minimise system changes and protect trading for customers over the holiday period.
"The moratorium means that the monthly pace of change in the index was lower, but it’s not clear yet if we’re on the cusp of seeing less intense cost pressures in 2023," he said.
There was better news for those building homes, as a report from Quotable Value yesterday showed the rising cost of construction appeared to be slowing.
QV CostBuilder, a report by the valuation and property services company, said the average cost of building a standard three-bedroom home in the country's main centres increased by 11.3% last year.
The previous update in May last year showed an annual increase of about 20.9%.
QV CostBuilder spokesman and quantity surveyor Martin Bisset said rapidly rising construction costs might finally be levelling off.
"At double-digit growth over the past year, we’ve obviously still got a long way to go before we get back to the stable price increases we saw pre-pandemic," he said.
The report also said the supply chain issues were reducing but some issues were likely with products from China.
Inflation both at home and abroad and the associated cost from rising interest rates were likely to be continued to be passed on to the consumers.
"Prices are likely to continue to rise as a result, albeit not at the rapid rates we’ve seen over the last couple of years," Mr Martin said.
The biggest price increase since QV CostBuilder’s update in May 2022 was related to framing, which went up 9.5% due to the increasing cost of precast concrete, reinforcing and structural steel.
Costs related to exterior walls and exterior finish also went up 7.7%, and the cost of upper floors and stairs and balustrades went up 7.4% and 6% respectively.
- ODT staff reporter
