Annual food price rise confirms need to rein in supermarkets’ super profits
Latest annual food price figures released today confirm the need to rein in the super profits of the supermarket duopoly, Commerce and Consumer Affairs Minister David Clark said.
Today’s food price index figures show an annual increase of 7.6 percent in March 2022 compared to March 2021. This is the largest increase since the year ended July 2011 when prices increased 7.9 percent, partly influenced by the National Government increasing GST from 12.5% to 15%.
“The March increase is above general inflation figures and highlights the role the grocery sector is playing in driving up prices,” David Clark said.
“Rising food prices is a global issue. Omicron, ongoing disruptions to global supply chains and Russia’s invasion of Ukraine is putting pressure on prices in every country, but that is exacerbated here by the lack of competition at the checkout. And that is something we can act on.
“Today’s figures confirm the findings in the Commerce Commission’s grocery market study that the supermarket duopoly is making profits at the expense of everyday New Zealanders.
“Even at their conservative estimate, the market study found that the major grocery retailers were earning excess profits of around $1 million a day, well above what would be expected in a workably competitive market.
“The average return of the major grocery retailers at over 12 percent was more than double the rate of normal return for grocery retailing in New Zealand of 5.5 percent.
“No matter how you cut it, it’s clear that New Zealanders are paying too much for their food and groceries.
“The Government is committed to taking action to pave the way for additional players to enter the New Zealand grocery market in order to increase competition.
“Given the importance of healthy levels of competition in our retail grocery sector I have not ruled out going further than the options that the Commission tabled in its final report,” David Clark said.
The Government will announce its response to the Commerce Commission’s recommendations next month.
David Clark said the Government also has a number of other initiatives designed to address the cost of living.
“We’ve cut fuel excise by 25 cents a litre and halved public transport fares to provide immediate relief for Kiwis, as the war in Ukraine drives up fuel prices globally.
“We recently increased support for families, pensioners and students, and in May, our Winter Energy Payment restarts, giving one million people an extra boost to help with their heating bills.
“The rising cost of living is a global challenge nearly every country is facing, compounded by COVID-19 related supply chain issues and the ongoing war in Ukraine. But we need to do what we can locally to help New Zealanders out and that means changes to the level of competition in our supermarkets.
The Government is putting measures in place to ease the pressure on New Zealanders. Ensuring consumers get a fair price at the supermarket checkout will be my key focus when we respond to grocery market study recommendations next month.”