Brad Olsen: Infometrics chief executive on grocery supplier costs continuing to rise

Grocery supplier costs to supermarkets have gone up again.

In the year to November, prices rose 2.1 percent according to Infometrics and Foodstuff's monthly index.

The report makes clear there's still some stubborn cost pressures in the system.

Infometrics chief executive Brad Olsen joined Heather du Plessis-Allan.

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Episode Transcript

Speaker 1 (00:00):
Well, it looks like food prices are still feeling a
bit of the pressure, aren't they. Grocery supplyer costs to
supermarkets have gone up again, this time by two point
one percent for the month of November, according to Infometrics.
This is according to Informetrics and food Stuff's monthly Index,
and the chief executive of Infometrics, Brad Olson, is with us.

Speaker 2 (00:15):
Now morning Brad, good morning.

Speaker 1 (00:18):
Do you worry about that when you look at this
you worried about inflation at all? Have we got a
problem like Europe? Scott?

Speaker 2 (00:24):
I don't think it's quite like Europe's gotten And I mean,
am I worried after the last couple of years almost always?
I think we're still quite scarred from that. There has
been a slight re acceleration, a slight change in trend,
with the grocery supply costs index now up two point
one percent. That's ever so slightly faster than what we
saw last month at two point zero. But to be fair,

(00:44):
the fact that we're sort of bobbling around the two
percent mark is a lot better than sort of a
year year and a half ago when we were seeing
double digit increases. So still a little bit of caution there,
and I think the big change here there has been
that go back sort of two years ago and you
had inflation across the board just about everything was increasing
in cost, whereas now it's a little bit more specific.

(01:05):
So yeah, there's a few pockets of pressure, but it's
more on specific items or specific areas rather than that
across the board sort of hit. So a little bit
more comfort there, but still always a little bit worried
as we head into the silly season around those sort
of pressures that are out there on the economy.

Speaker 1 (01:21):
Right, so specifically the groceries. What's putting this up.

Speaker 2 (01:24):
There's a few things that we've seen, particularly in the
November figures, there were a few high cost increases coming
forward for the likes of bakery and chilled goods that
seemed to be driven by dairy particularly, you know, the
likes of butter and similar that has come up Internationally.
There's not quite as much milk supply into the system,
but there's still pretty healthy levels of demand, so that's

(01:45):
been pushing prices up. That of course has been good
for farmers in recent times, but at the same time
it's meaning that we're all having to pay a bit more.
The last couple of months, we've also seen the likes
of cocoa prices that have been increasing internationally because there's
been less coco being produced that's push prices up, and
the same with olive oil. So again a few more
sort of specifics and often around those supply and demand dynamics.

Speaker 1 (02:09):
Listen, Brad, just just on the OCR. I've been having
some chats over the weekend with people who are involved
in retail and various other businesses, and every single one
of them keeps saying to me, this is the worst
economic conditions we've ever seen, worse than the GFC hardesting
and we've ever been through. And we're not seeing a
pick up in retail spending at the moment right, So
clearly we are an economy still under pressure. I can't

(02:30):
help but shake. I can't shake the feeling that the
Reserve Bank is making a massive mistake leaving us for
three months with the OCR setting where it is.

Speaker 2 (02:38):
What do you think, Well, I think we're actually seeing
some earlier signs of the economy packing up a bit fast.
I mean, look, it always takes time for the official
cash rate to come through, but the likes of Worldline
were reporting last week that the first week first seven
days of December did see a pickup in retail spend
compared to the year before. The Likes of Cards data

(03:00):
out last week from Stats in z for November it
was broadly flat, you know, you know, there wasn't a
lot of a pack up there, but also it wasn't declining.
I think the challenge, though, Heather, is that even if
the Reserve Bank moved, you know, a huge amount more
with the official cash rate, even before this three month
break that they're taking for a lot of people, they're
still locked in for probably a good another six months.

(03:21):
So unless they're going to pay some pretty significant break
free fee, you're not going to see a huge, huge shift.
So I feel like we're trying to navigate a very
difficult position where for the next couple of months we've
got just that sort of time delay while people start
to refix. Then things will definitely come through, But until
those people make it to their next refixed point, there's

(03:41):
a lot of pressure, a lot of concerns still to
go under the bridge. So that's where I think that
idea that there are better economic times coming is very
much true, but it's just we're not quite there yet.
We're just going through the sort of the time delay.

Speaker 1 (03:53):
Yeah, good stuff. Hey listen, thanks for running us through that.
Brad Olson, Infometrics, Chief Executive.

Speaker 2 (03:58):
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