The annual average increase in the cost of goods which supplies charged supermarkets continues to increase, albeit at a slower pace in recent months.

While costs are still rising, they are doing so at a progressively slower rate with a 2.9% increase in what suppliers charged Foodstuffs supermarkets compared to a year ago.

Infometric principal economist Brad Olsen said while the annual rise has eased from an annual peak of 10.6% in December 2022 to 4.5% in December 2023 it has slowed only slightly in recent months — a 0.3% decrease since March.

“This trend reinforces our recent views that cost pressures are currently on track to level out at a slightly higher rate than before 2022.”

The Infometrics-Foodstuffs New Zealand Grocery Supplier Cost Index (GSCI) measures the change in the list cost of grocery goods charged by suppliers to the Foodstuffs North Island and Foodstuffs South Island co-operatives.

Olsen said just under 2900 items increased in cost in May 2024, up around 50% from the same month in 2021.

“Around a tenth of May’s cost changes were rises of more than 20%, but there were also some cost declines, with nearly a fifth of cost changes being monthly declines of between 0% and 20%.”

Cost increases slowed further for all departments in May 2024.

“Produce costs are up just 1.0%pa, with lower costs for spring onions, some fruits, and some green vegetables.

“General grocery costs are up 3.4%pa, their slowest annual increase since March 2022.

“Chilled and frozen goods have seen a continued moderation in annual cost increases, and butchery cost growth remains at 2.0%pa.”

Stabilising on-farm costs over the past six months are “encouraging”, said Olsen.

“These factors will support the current moderation in cost increases. But stubborn cost pressures in the domestic economy are still resulting in more increases in product costs than a few years ago.”