Latest statistics show New Zealand still has one of the lowest rates of food price inflation in the developed world but offshore rates suggest a possible upward trend after bottoming out in 2024.
Stats NZ reported a nationwide food price inflation (FPI) rate of 1.5% in December, year on year, while the Foodstuffs grocery co-ops saw a rate of 1.0% in their comparable FPI basket.
The two Foodstuffs co-ops have been monitoring the FPI rate across their 500-plus stores, including every New World, Four Square and PAK’nSAVE, since mid-2022, when they made a conscious commitment to fight food price inflation.
December’s figures from Stats and Foodstuffs confirm that FPI in New Zealand has crept back up from the deflationary lows both reported in June, of -0.3% and -0.5% respectively (YOY), and is now around the bottom of the Reserve Bank’s target range for annual CPI of 1-3%.
Foodstuffs NZ Managing Director Chris Quin says while any rise isn’t ideal, New Zealand’s rate is still low compared to most countries overseas, at the start of what could be a challenging year.
“New Zealand heads into 2025 with an average food price inflation rate of around 1% to 1.5%,” says Mr Quin. “By comparison, Australia’s FPI rate spent the end of last year hovering around 3%, and the average annual rate for the entire OECD climbed back over 4%.
“In Europe, only a handful of countries have seen the same low rates of food price inflation New Zealand recorded in the second half of last year, and most are now seeing it creep back up.
“That means we start the year on the front foot by that measure and well-placed to withstand inflationary supply chain pressures that may arise from what Treasury described as a highly uncertain global outlook due to increasing trade protection and geopolitical conflicts.
“We know from our latest quarterly survey of over 1800 shoppers that there’s less concern about inflation than there was two years ago, and we note Treasury’s expectation for CPI to stabilise around 2% from early this year.
“Nevertheless, our co-ops will stay focussed on managing inflation in 2025, by constantly seeking good deals for shoppers, and by running our stores and supply chain as efficiently as possible.”
Primary drivers of Foodstuffs’ 1.0% YOY rate in December were a -11.2% decrease in produce in the co-ops’ basket, versus a 3.1% rise in meat and fish, and 4.0% rise in general grocery foods.
Specific foods that saw the biggest YOY price decreases included orange kūmara (-59.6%), brown onions (-44.8%), crown pumpkins (-40.8%) and strawberries (-27.1%).
“We sold over 1.9 million punnets of strawberries in December – easily the most popular produce item sold that month and almost half a million more than in December 2023,” says Mr Quin.
“Our produce experts say overall fruit supply continues to be plentiful and good value as a result, with supply a few weeks’ ahead of schedule for many summer favourites, and new season apples expected in stores over the coming weeks.
“At the same time our transport experts say peak season shipping surcharges are coming down but not as quickly as in previous years, on top of an increase in some port charges, and rail line closures impacting rail services in the upper North Island.
Foodstuffs’ supplier costs were up 3.1% in December (YOY) for goods in the co-ops’ FPI basket, down from 3.4% in November.
Mr Quin says New Zealand can mitigate supplier cost pressures by ensuring regulation doesn’t get in the way of businesses growing and succeeding.
“Excessive compliance costs and added regulatory complexities, though well-intentioned, often end up increasing the cost of doing business, which ultimately impacts prices for customers.”
