8 Aug 2022

Grocery cost increases accelerating as suppliers face challenges

12:28 pm on 8 August 2022

The cost of groceries from suppliers are continuing to grow, amid pressure on production and supply chains.

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Photo: RNZ / Richard Tindiller

The new Grocery Supplier Cost Index from Infometrics and Foodstuffs, showed grocery supplier cost increases have accelerated to 7.9 percent annually in July, compared to 7.1 percent in June.

Infometrics principal economist Brad Olsen said the cost of produce was a key driver of higher overall grocery costs.

"The number of items increasing in cost in July 2022 is more than double the number of items back in July 2019, prior to the pandemic," he said.

Fruits and vegetables supplier costs increased 16 percent while butchery and seafood costs were up nine percent each over the 12 months ended July.

Olsen said suppliers had been under immense pressure.

"We've seen a huge range of pressures on suppliers. Everything from the tight labour market to international shipping challenges, but also the likes of fertiliser prices particularly in the produce area and a number of other goods prices, all of those inputs rising over time."

Olsen said supplier costs were likely to continue to keep rising, which meant more pain for consumers.

"We do expect to see those costs continue to build.

"There's a lot of volatility still in markets and although there's a bit of a pull back in recent times around commodity prices, there's still a lot of inflationary pressure around which we expect to continue to keep things in a higher cost growth environment for a while longer."

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