18 February 2022

Have supermarket prices reached breaking point? Tell us what you think.

Are you surprised at how high your grocery bill is getting? Many of us are now feeling a nagging anxiety as each item is scanned at the checkout, watching the bill creep higher and higher. This week, Stats NZ announced that year-on-year food prices have increased by the highest amount in over a decade, with a 5.9% increase from January 2021 to January 2022.

Fruit and vegetables, the backbone of a balanced diet, were up 15%. As an example, the humble tomato cost $2.94 per kilogram in January last year. This year they reached $7.29 per kilogram. Many households are sucking up these extra costs because they don't want to compromise a healthy and balanced diet, but others have no choice but to cut back on leafy greens and fruits.

We'd like to hear your thoughts on the cost of groceries so if you'd like to share your insights, please take our survey.

Shot of fresh food at supermarket.

Our consumer sentiment tracker has found cost of living concerns are rising. Last year, 63% of respondents picked food and grocery costs as their biggest cost-of-living concern.

Lucy, who has a partner and two children, says they have an 'average' income, but she has become shocked at how high her grocery bill has got. Photo to accompany. "We eat really simply. I used to do a top up shop at the supermarket, and it would cost $50 for a few items. These days it's easily over $100. It means I need to meal plan – we can't afford for any food to go to waste, we have to actively consider what we’re buying and the pricing of each item. It definitely affects my food choices".

Consumer NZ has been campaigning for more competition in the supermarket sector. We have one of the most concentrated supermarkets industries in the world with just two major players, Woolworths New Zealand (Countdown) and Foodstuffs (owner of the New World and Pak’nSave brands).

We have long suspected their profits are a lot higher than they should be.

The lack of competition means consumers aren't getting a fair deal. Our campaigning has meant that they're now facing scrutiny as the Commerce Commission investigates the supermarket sector. The Commission’s draft report confirmed what we suspected - New Zealanders are paying above the odds for their groceries, with the supermarket’s profits persistently above what they would be in a competitive market.

Now it's crunch time – next month the Commerce Commission will release its final report with recommendations. The question is, will this result in lasting change and competitive prices at the checkout?

If you'd like to join on our campaign for fairer food prices, please sign up here.

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Isobel R.
22 Feb 2022
We need more competition

As New Zealand has a duopoly in supermarkets is it surprising those companies have open slather to pick and choose who supplies the product they buy. Many more of their supermarket own name product appear and the known name brands disappear. How is that consumer choice? What about the companies that produce known name products? They get squeezed right out of the market allowing the supermarket full reign. Is it any wonder then that the supermarkets are making a large profits. The suppliers of fresh product get squeezed by the supermarkets knowing that the supplier has a limited time frame to sell the product because it is fresh. Again is it any wonder they try to send their produce overseas. The huge price increases especially in fresh product and the lose of quality has been evident for at least the last couple of years. All the while prices climb.

Chris S.
22 Feb 2022
Milk prices here vs UK

I just saw today (22 Feb 2022) on TVNZ news report of weather drama in UK, a permanent roadside sign advertising TWO x 2 Litres of milk for 2 Pounds. Pretty much the price of ONE 2 Litre in NZ.

James C.
19 Feb 2022
It's a Duopoly

Simple. And the supermarkets milk it for all its worth.
Over $20 for one organic whole chicken. High prices prevent producers achieving economy of scale faster.
Talk to anybody who wants to break into the duopoly to sell product and its an inefficient expensive process of promoting product to every store. One would think supermarkets would be making this a more efficient process like in the US where you pitch to central buyers at head office and they stock across all stores. Also tough to compete with the big guys like Unilever when they are paying for shelf space too!

Kyle S.
19 Feb 2022
We need more competition!

I follow a UK food poverty blogger on Twitter, they recently did a thread highlighting the price of supermarket brand staples at Lidl and I was shocked at the price disparity compared to NZ. I know there is a major difference in price due to a smaller market and other related costs but seriously? UK prices for most products were a QUARTER of what we pay. Having lived in Australia for many years I saw the impact of Aldi appearing in Australia, as Woolworths and Coles were forced to reduce prices by about 30%. Unless the government can entice a major "own brand" international competitor like Lidl or Aldi the incumbents are not going to change. AS far as I am concerned the NZ owned campaign used to justify the lack of competition is a deflection. I think there needs to be incentives for competition, mainly by removal of red tape in the area of planning, offering land to new competition for stores and distribution.

John S.
19 Feb 2022
Supermarket Bias

It was a great shame that, during the lock-downs, life was made difficult or impossible for the small businesses such as grocers, green grocers, and convenience stores and the supermarkets were left free to pick up the business.
To be fair there should now be a four to eight week period where the supermarkets are not allowed to sell meat, fruit or vegetables so that small business can get back a share of the action.

Keith W.
19 Feb 2022

David Clark claimed over a year ago that he was "investigating supermarket monopolies" ......... what's happened .... nothing. He needs to "stir up" his department ! It isn't that big a job with the number of staff employed !

Paul C.
19 Feb 2022
Prices too high

The two main chains are cranking prices up. They have never really competed in the traditional sense. They randomly run specials which can never be prepared and are limited to a few lines. The lines change constantly. Rather than compete and give better prices they build supermarkets next to each other. On the one hand this provides choice. On the other there is excessive capital tied up in multiple large foot print stores. Capital need a return so prices and margins stay up. We have a duopoly.

Alternatives are trying to take some share including independent specialty stores and markets for basics, mostly vegetables. But these are unable to take significant share, partly due to the convenience of a single stop and the fact that people are time poor.

Moreover we hear stories of suppliers being screwed to the wall as well.

If one was cynical there are a couple of spins on this:

1. The two chains are taking advantage of Covid to increase profitability.
2. They are leading prices up ahead of Cosco entering the market so they can drop them again.

Back to reality the final factor is exports. We have recently seen that 90% of red meat is exported. This puts pressure on the local market, which is palpable at the fridge. The same applies to many categories. Finally there is fruit and some vegetables. We only get reject product in NZ and it is still expensive.

In summary we have a duopoly which competes by building realestate rather than at the checkout. We export much of our food with no incentive to feed New Zealanders.