Source: Radio New Zealand
Shoppers are bracing for more food price rises. 123RF
Shoppers are bracing for more food price rises, but the Grocery Commissioner has put supermarkets on notice about their margins.
Foodstuffs NZ managing director Chris Quin told Morning Report that there was likely to be pressure on food prices as conflict in the Middle East pushed up oil prices. Food prices were already up 4.5 percent year-on-year in February, before the impact began to be felt.
Quin said while it was hard to say at this point exactly how large the impact would be, it would become more of a problem the longer the conflict continued.
He said Foodstuffs was hearing from suppliers that they were under pressure too.
Grocery Commissioner Pierre van Heerden told Midday Report that he had told supermarkets that the Commerce Commission’s expectation was that if prices increased, they dropped as soon as they could as well, and that supermarkets were not seeking additional margin.
“Discussions with suppliers about the pressure they are facing should be done in good faith, as per the grocery supply code.”
He said supermarkets had indicated that as of yet, the additional cost was not being passed on.
“It’s dependent on how long this war continues, how long they can do that.”
Van Heerden said grocery margins had come down a bit in recent years and then stabilised.
“I would expect to see them stable or come down,” he said.
Grocery Commissioner Pierre van Heerden.
There was increasing competition in Auckland, he said, but other parts of the country were still only served by the duopoly.
The Commerce Commission is currently running an anonymous survey of supermarket suppliers to check for any concerns in the sector. He said small and medium suppliers were often scared to raise issues.
One shopper, Delwyn, said she was now spending about $500 a week on food for her family of five. She had to shift to chicken and pork mince instead of beef, which has risen [. https://www.rnz.co.nz/news/business/589814/mince-records-biggest-annual-increase-since-data-began more than 20 percent] in a year in price
She said supermarket shopping could be a depressing and disheartening experience.
Earlier, Gemma Rasmussen, Consumer NZ’s head of advocacy, told RNZ that she was concerned about the potential for supermarkets to push up prices amid the conflict.
She said when Cyclone Gabrielle hit the Hawkes Bay, she spoke to a producer who provided an example of a produce item that was affected by the floods.
“This resulted in the store price going from $3.50 a kg to $9 to $14.
“They said, if it’s sold for $3.50 retail, the supermarket is buying it for around $1.99 wholesale. It ended up reaching $4.50 wholesale, but despite this, it ended up being sold in the supermarkets for as high as $14.
“One supplier spoke of an instance when the margin a major supermarket made on a frozen product was close to 60 percent. He’s currently selling frozen produce with an alternative retailer who is ‘a dream to work with’ and takes only a 25 percent margin.”
She said the country could do well to look at what Australia was doing to moderate supermarket prices.
“From 1 July 2026, it will introduce a specific excessive pricing regime for very large supermarkets that will ban prices considered excessive in relation to supply cost plus a reasonable margin. If one of the big players breaches these rules, it will face penalties of up to A$10 million, three times the benefit gained, or 10 percent of turnover.
“In effect, this is a direct attempt to curb price gouging and hold major supermarkets accountable where mark-ups are excessive and unjustified.
“New Zealand could benefit from a similar regime. Long-term structural reform has so far done little to meaningfully reduce supermarket pricing pressure, and with cost-of-living concerns continuing, households remain exposed to pricing that may be difficult to justify.”
Sign up for Money with Susan Edmunds, a weekly newsletter covering all the things that affect how we make, spend and invest money.
– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
