Foodstuffs data suggests food inflation fears easing

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Despite multiple factors driving inflation, Foodstuff NZ says cost and price pressures are moderating.

Stats NZ’s monthly Food Price Index (FPI) revealed that food prices rose 9.6 per cent in July, down from 12.5 per cent in June.

Meanwhile, Foodstuffs’ retail price increases rose 7.3 per cent in July while the average cost increase from suppliers was up 6.9 per cent.

Foodstuffs NZ MD Chris Quin said July was the third month in a row that price increases were slower than the month before.

“It takes time, usually months but often years, for shocks and shortages to work their way through the supply chain and have an impact on shelf prices, and that’s what we’ve been seeing over the past two years.”

The largest contributors to supplier’s cost increases were raw materials, freight and staffing while wet weather conditions contributed to challenging prices of leafy greens.

“We’re still facing a significant volume of cost increases from suppliers, but the level of increases fell this month, which is encouraging,” said Quin.

The retailer’s online survey of more than 1500 customers in July found 59 per cent expect their financial position to improve or stay the same over the coming year while conversely, 41 per cent expect their position to worsen.

Quin says New Zealand can’t escape major shifts in offshore supply and demand which will ultimately have an impact on what customers pay.

He also added that the current inflationary environment is affecting customers’ spending habits.

“They’re cutting back on non-essential items, switching to private label brands like Pams and Value, and buying more frozen goods, less alcohol and less meat.

“It’s positive that we’re starting to see signs that customer sentiment and inflation figures are beginning to turn a corner, but both have a long way to go before we return to normal.”

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