The annual average increase in the cost of goods which suppliers charged supermarkets is now at its slowest since the end of 2021.
While costs are still rising, they are doing so at a "less intense" pace, with a 3.7% increase in what suppliers charged Foodstuffs supermarket when compared to a year ago.
Infometrics principal economist Brad Olsen said that the February 2024 month still had a considerable boost in supplier cost increases from January, with the largest monthly gain since July 2023.
"However, this monthly gain is still lower than in February 2023, when it was so significant that the annual rate re-accelerated back to 10.4% year-on-year.”
The Infometrics-Foodstuffs New Zealand Grocery Supplier Cost Index (GSCI) measures the change in the list cost of grocery goods charged by suppliers to the Foodstuffs North Island and Foodstuffs South Island co-operatives.
Olsen said over 4800 items increased in cost in February 2024, more than triple the number increasing in cost in February 2021.
"There is a sustained trend of more individual cost increases continuing to occur."
Almost all departments recorded a monthly rise in supplier costs in February 2024.
“Frozen foods increased further, driven by frozen vegetables and frozen fries," said Olsen.
"Grocery items also saw a larger increase in supplier costs, driven by higher coffee, energy and powdered beverages, and chocolate supplier costs."
The number of items increasing in costs remains elevated compared to pre-2022 levels, with gains across most departments and no falls in costs.
External data confirms less intense input cost pressures for suppliers than in recent years, which Olsen described as "encouraging."
"But the February result also reconfirms that the ‘new normal’ for supplier cost rises may be higher than before."
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