Supermarket supply costs 10.4% higher compared to a year ago

Grocery supplier costs for supermarkets once again accelerated in February 2023, further contributing to increased prices at the till.

The Infometrics-Foodstuffs Grocery Supplier Cost Index (GSCI), which tracks changes in supply costs, measured a 10.4% increase in comparison to one year ago.

The index, which utilises data across over 60,000 products, says 8200 items increased in cost in February 2023, a total four times greater than in February 2020 and the third largest since 2018.

In a statement, Infometrics chief executive Brad Olsen said the uptick had been anticipated due to annual increase patterns caused by the summer moratorium.

He added that the global food prices and domestic fuel prices remained elevated but steady, however input costs such as packaging were continuing to rise.

"Domestic inflation pressures have not eased substantially yet, and weather-related disruptions will only reinforce some of the pressures already in the system, as supply is limited," Olsen said.

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Price jumps were recorded in every grocery department, the highest being in produce which averaged a 23% rise in cost, followed by frozen foods, seafood and butchery at 13%, 12% and 10% respectively.

The smallest increases were seen in liquor, which climbed around 3%, while tobacco and bulk foods jumped approximately 4%.

Olsen cites higher prices for core business requirements for producers, such as freight, maintenance and packaging, as a primary contributor to the increased shelf prices.

"These rising cost pressures highlight the broad rises in operational costs being incurred by producers across the supply chain, which is driving further increases to supplier costs," he said.

Each month the index tracks what it costs supermarkets to buy goods to put on shelves, previous analyses indicating supplier costs are the major component of on-shelf prices, representing two-thirds of products' costs.

In January 2023, supply costs climbed 10.6% compared to a year earlier, with produce seeing a similar rise of 24%, and frozen food, seafood and butchery all climbing by over 10%.