Grocery suppliers have been faced with a perfect storm as grocery prices rise, says FGC in response to analysis by consultants Infometrics.
The analysis, which was commissioned by Foodstuffs NZ, shows grocery costs from suppliers rose 7.9% in July.
Infometrics Principal Economist and Director Brad Olsen says the cost of groceries from suppliers continued rising increasingly rapidly since April last year, and this growth in input costs has been across the board.
FGC says suppliers were faced with a perfect storm after most had been absorbing their costs.
“Most suppliers have been absorbing costs for quite some time, conscious of cost pressures on households, but there comes a point where they can’t do that anymore, and unfortunately that means higher prices at the supermarket.
“It’s actually a bit of a perfect storm.
To start with, a tight labour market has forced wages up and forced many companies to pay penalty rates because they can’t fill vacancies. They have to do this if they are to meet demand. Many members report a lack of staff is their No1 problem.
“Then there are higher power and fuel prices pushing up the cost of manufacturing and getting goods to market, and that all puts pressure on prices
“And lastly, the cost of imported goods and ingredients have been pushed up by huge global post-covid demand and the war in Ukraine.
“The post-covid demand has meant a shortage of ships and containers, and when combined with NZ being at the bottom of the world and on the end of the shipping routes, freight costs have risen massively – in some cases by 500%. The war in Ukraine has also put big pressure on world prices of wheat and cooking oils as their exports have been blocked.
“Suppliers have been absorbing these costs for as long as they can.”