Source: Radio New Zealand
Fruit and vegetables are up 9.4 percent on last year, with meat, poultry and fish rising 7.5 percent. 123RF
New Zealand would benefit from a regime banning “excessive” supermarket prices, Consumer NZ says.
The organisation says some supermarket shoppers are questioning how quickly food prices have risen, as conflict in the Middle East pushes up oil prices.
There have been warnings that the cost of food may rise as producer and transportation costs increase.
Consumer NZ head of research and advocacy Gemma Rasmussen said it was understandable that shoppers were worried about how high prices could go.
Stats NZ data for February showed even before the impact of the conflict on oil prices was felt, food prices were up 4.5 percent year-on-year. Fruit and vegetables were up 9.4 percent and meat, poultry and fish 7.5 percent.
“When you pick up an item off the shelf, countless factors contribute to the final price. That makes it extremely difficult for consumers to know whether they are paying a fair and accurate amount,” Rasmussen said.
“Whether you’re an everyday shopper or a seasoned economist, breaking down the true pricing of any food item in a supermarket is close to impossible.
“The question for shoppers is: Are the prices you’re paying for food fair and competitive, and are there instances when the supermarkets are using external pressures as a smokescreen to jack their prices?”
She said when Cyclone Gabrielle hit the Hawkes Bay, she spoke to a producer who provided an example of a produce item that was affected by the floods.
“This resulted in the store price going from $3.50 a kg to $9 to $14.
“They said, if it’s sold for $3.50 retail, the supermarket is buying it for around $1.99 wholesale. It ended up reaching $4.50 wholesale, but despite this, it ended up being sold in the supermarkets for as high as $14.
“One supplier spoke on an instance when the margin a major supermarket made on a frozen product was close to 60 percent. He’s currently selling frozen produce with an alternative retailer who is ‘a dream to work with’ and takes only a 25 percent margin.”
She said businesses could set or increase their prices as they saw fit unless there was some form of price regulation in place.
“Australia had a similar model. However, from 1 July 2026, it will introduce a specific excessive pricing regime for very large supermarkets that will ban prices considered excessive in relation to supply cost plus a reasonable margin. If one of the big players breaches these rules it will face penalties of up to A$10 million, three times the benefit gained, or 10 percent of turnover.
“In effect, this is a direct attempt to curb price gouging and hold major supermarkets accountable where mark-ups are excessive and unjustified.
“New Zealand could benefit from a similar regime. Long-term structural reform has so far done little to meaningfully reduce supermarket pricing pressure, and with cost-of-living concerns continuing, households remain exposed to pricing that may be difficult to justify.”
Rasmussen said cost-of-living concerns were rising and shoppers were “continually” affected by potentially unfair or excessive pricing.
“New Zealanders don’t have time to wait for long term structural changes to be implemented and take effect.”
Woolworths and Foodstuffs were approached for comment.
Separately, Foodstuffs provided an update that said it was still business as usual at its supermarkets but its suppliers were planning ahead.
“New Zealand sits at the end of global supply chains, so we’re always looking upstream and keeping an eye on international events that could have flow-on effects for us,” said managing director Chris Quin.
“A large proportion of our products are grown or manufactured locally in New Zealand or Australia, sourced from Asia, or travel from Europe around the Cape of Good Hope at the bottom of Africa. So, right now our grocery supplies are largely unaffected by the disruption in the Strait of Hormuz, and our normal offer’s available in our stores.
“The main issue at the moment is higher fuel, freight and packaging costs rather than product availability.
“We’ve seen the cost of diesel for our transport fleet rise significantly, but at this stage we’re absorbing that to help keep our food prices as steady as possible for customers.
“For every dollar on-shelf, around two-thirds goes to suppliers for the goods themselves.
“So if suppliers are facing higher freight, fuel, packaging or other input costs, those pressures flow through over time. As we’ve all seen, this is a fast-moving situation, with no clear timeframes or outcomes. The effects of what’s happening now with supply chains and fuel prices could still be felt months down the track.”
Woolworths said it was watching the situation closely. “At this stage our stock levels and pricing have not been affected but we continue to monitor it.”
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
