Freezes and rollbacks by supermarkets on grocery prices are a recognition there’s a part for supermarkets to play in ensuring affordable groceries, says Katherine Rich.
She says she suspects suppliers are paying for these reductions one way or another and “retailer profits will be unharmed”.
“Expecting suppliers to reduce costs further following 20 years of duopolistic pressure is unrealistic and unfair.
“With the supermarkets shifting risk and cost back onto suppliers due to market power, any fat was trimmed years ago. Suppliers have given and given again, and now they are facing increases of up to 700% in freight costs and significant hikes in ingredient costs and other factors.”
Meanwhile, Foodstuffs’ decision to “roll-back” the prices of 110 grocery products by 10% is the equivalent of reducing the average price of its entire product range by 0.26%, says Stuff business reporter Tom Pullar-Strecker.
He calculated this by taking into account Foodstuffs North Island’s and Foodstuffs South Island’s estimate of $500,000 savings from the move, the $10 billion annual spend in their stores, and the total $22b annual spend by 1.8 million Kiwi households on groceries.
He says “that amounts to about 57 cents off the average household’s $226 weekly grocery bill”.
But he says it’s still a step in the right direction.