A just-released report indicates that, although food costs are rising at a less dramatic pace than a year ago, ongoing supplier costs are driving still-steep grocery prices.
Rising grocery costs have been impacting people heavily this year, as illustrated by the Times-Age report in April that more than 9 per cent of Wairarapa residents were now relying on foodbank services.
New data from the Infometrics-Foodstuffs Grocery Supplier Cost Index [GSCI] shows that in May this year there was an 8.8 per cent increase in what suppliers charged supermarkets for goods.
Notable products in the fresh produce department contributing to this rapid increase were avocados, cucumbers, and bananas, while in the grocery department were pet food, energy drinks and chocolate.
With food costs remaining high, Masterton Foodbank chairperson Steve Sale said there has been a notable increase in people depending on extra support.
“There is more of the working class who are struggling,” said Sale.
“They might be homeowners struggling with meeting the extra costs of increasing interest rates, insurance, and food prices.
“We certainly have noticed it and expect it to continue, unfortunately.”
Last week over a period of four days, 103 food parcels were collected from Masterton foodbank.
Each parcel contains food intended to tide a person over for two to three days.
Sale said despite the support the foodbank receives via fundraising and donations, they are noticing their own budget is also taking a hit.
“We still need to buy the basics throughout the year, to meet demand for our parcels,” Sale said.
“We’re finding that our dollar’s not going as far as it used to.”
Sale expects increased costs to continue through winter and noted that higher heating costs will also impact already stretched budgets.
Past analysis has shown that supplier costs plays a huge role in the final price of a product when it hits the supermarket shelf, and can represent up to two-thirds of the final price – something borne out by the latest GSCI data.
Infometrics chief executive and principal economist Brad Olsen said the ongoing high cost of groceries is a result of supplier input costs.
“Input costs for suppliers continue to rise, including wages, raw materials, and other services,” Olsen said.
“Looking forward, both global indicators and domestic data point towards further moderation in cost pressures over time.”
Although costs are rising more slowly than this time last year, Olsen noted they are still growing at a more rapid pace than what is considered normal.
