David Clark takes aim at supermarkets as food prices rise

Source: 1News

Commerce and Consumer Affairs Minister David Clark has hit out at supermarket conglomerates Woolworths and Foodstuffs for their role in New Zealand's rising food prices and indicated it was time for the country's supermarket duopoly to be broken up.

A Stats NZ report released on Wednesday showed food prices had risen 7.6% in the past year, the highest annual increase since GST was risen in 2010.

READ MORE: Fruit and vege prices up whopping 18% in a year - Stats NZ

The highest increase was in fruit and vegetable prices, which rose a whopping 18%.

Foodstuffs and Woolworths have a combined 90% share of the market for Kiwis' main food shop.

Clark said he was "disappointed" in the rise in food prices, which he believed had been scaled up by the supermarkets in order to maintain profits of over $1 million per day.

"We've seen today that the Food Price Index has gone ahead of general inflation. That is concerning and indicates that there's more supermarkets could do to make fruit and vegetables, and other food, more affordable for New Zealanders," Clark said.

"We want to ensure that when savings are being passed on from suppliers [to supermarkets], those savings are then passed on from supermarkets to consumers.

"The supermarkets are making profits in excess of what is reasonable."

Last month, the Commerce Commission announced a suite of recommendations to improve competition in the supermarket sector.

READ MORE: Supermarket sector competition 'not working well for consumers'

The key issue the Commerce Commission found was that competitors wanting to enter the grocery market face significant challenges, starting with accessing land.

It recommended making more land available for new grocery stores, new planning laws, the banning of land covenants and exclusivity clauses, improving access to the wholesale market, requiring major retailers to fairly consider requests to supply competitors, and monitoring the likes of "best price" clauses and exclusive supply agreements.

READ MORE: Shopper finds ordering groceries from Aus cheaper than NZ supermarket

But Clark said on Wednesday he may go even further than what was recommended.

"I think today reaffirmed the need to take a look at all the measures that could be on the table.

"I'm willing to go further. The divestment of supermarket options is something that's in the mix... we're going to look at all the options available to us because this is too important. Kiwis deserve to know they're getting a fair deal at the checkout."

Clark said other supermarket chains want to enter the New Zealand market and his recommendations to Cabinet on the matter would "pave the way for a more competitive market for New Zealanders".