What's happened to supermarket prices after the freeze?

Thursday, 20 October 2022

As food prices rose quickly earlier this year, supermarkets responded with promises to freeze or “roll back” prices.

But now that Countdown’s price freeze promotion has ended and Foodstuffs’ price roll-back is due to finish at the end of November, where have prices ended up?

A Countdown spokesperson said over the course of winter, suppliers of some products increased the prices they charged supermarkets by up to 50%.

The supermarket and its suppliers were trying to keep prices down where possible, “but the reality is we can’t absorb all the inflation we’re seeing,” she said.

* Countdown prices increase by 3.6% on a year ago

* How to avoid paying too much while doing your grocery shop online**

Countdown opens a new $150 million fresh produce and meat distribution centre in Auckland.

At Countdown Victoria St West in Auckland a loaf of home brand bread was $1.20 in July and on Tuesday it was selling for $1.30.

A 1kg box of Countdown Wheat Biscuits had risen from $5.20 to $5.80.

Aaron Beck, former Stats NZ senior manager for pricing, social and population insights, explains the food price index.

A 2kg Odd Bunch bag of apples was $5.45, up from $5 in July and $3 in May, while a 1kg bag of Essentials rice had gone from $2.20 in May, to $1.90 in July, and now back up to $2.40.

But the price of a block of Countdown’s Edam 1kg cheese has remained unchanged at $13.50.

Lincoln University agricultural economic professor Alan Renwick said in May that the price freeze would help consumers in the short term, but it would probably put more pressure on supermarket suppliers.

Pressure would build on those prices when the promotions and reductions ended, possibly leading to higher prices, he said.

The Countdown spokesperson said it was constantly reviewing its products and prices and most items that were in the Winter Freeze programme had not increased in price since. But the price freeze had become unsustainable for some items and they had been removed from the programme.

Most products that were price frozen over the winter were also included in the more than 3400 in Countdown’s Great Price range, which kept products at low prices and for longer, she said.

But not all Great Price products would be available to customers, largely due to store ranging and stock availability.

“Some of our stores will have different ranges of the Great Price products available, so the number of products will change depending on the store you have selected to shop from.”

It would also close its online shopping pick-up and delivery service on Labour Day to give the delivery team a break before the Christmas rush.

Over the winter Foodstuffs, which operates the New World, Pak’n Save and Four Square brands, rolled back the prices on 110 essential items to the price they had been on average during the 13 weeks between January 25 and April 25 last year.

Head of public relations Emma Wooster said the rollback initiative was still on at Pak ‘n Save.

“Cost increases from suppliers on price rollback products at Pak ‘n Save are absorbed by our co-operative members,” she said.

In July, a 500g block of Pam’s butter was $5.49 – it was now 10 cents cheaper. A loaf of Value white toast bread was still $1.19, and 1kg of Value long grain rice had stayed the same price at $1.89.

“We’re doing everything we can to not pass additional costs on to our customers and Foodstuffs have now held food price increases below inflation for five consecutive month in a row.”

In August New World introduced Everyday Low Price, which was low stable pricing for hundreds of everyday items.

That meant prices were held “low and stable” for months, which delivered consistency at the checkout, Wooster said.

The range of items that were included had been researched by Foodstuffs and included a mix of branded and home brand grocery items, as well as household and personal hygiene products.

“Customers were telling us they wanted more certainty of the price of their essential groceries in these inflationary times,” Wooster said.

Foodstuffs had run initial surveys to see how Every Day Low Price was landing with New Zealanders.

Customers said low prices mattered most on things like bread, butter, cheese, flour and sugar.

“Our sales data supports this as products on the Everyday Low Price ticket are being selected by customers in higher volumes than others,” Wooster said.