Brad Olsen: Infometrics principal economist on report finding grocery prices gradually rising

Suppliers to supermarkets appear to be charging more, more often.

Which comes with a warning it could be the new norm.

Foodstuffs has commissioned a report by Infometrics tracking the prices of 60,000 products — which has found they appear to keep gradually rising by 2.3 percent a year.

Infometrics CEO and principal economist Brad Olsen joined Mike Hosking.

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Episode Transcript

Speaker 1 (00:00):
Insight into supermarkets in the Price we pay you report
this morning tells us we might have things roughly under control.
And you'll figure this is supplier numbers. Two point three percent.
It's on more than sixty thousand products. Tracked Infometric CEO
and principal economist Brad Olsen did this particular report and
he's gone. He's just always on WhatsApp, Brad.

Speaker 2 (00:20):
How are you good morning? Oh well, thank you?

Speaker 1 (00:23):
Booming and fantastic two point three percent? Can we live
with that? That's acceptable. That's in the band of normality, isn't.

Speaker 2 (00:28):
It certainly in a better position. I think the challenge
at the moment is that that two point three percent
a year is still above what we've seen it before
inflation really got going. You know, if you look back
sort of twenty eighteen twenty nineteen or so, you were
seeing annual increases just below two percent. So it is
slightly higher than you'd want to see, but also given
the sort of pressures in recent times, it is does

(00:51):
seem like a bit more of a new normal. It's
certainly better than when we were seeing double digit increases.

Speaker 1 (00:56):
And how much of that numbers made up of the
wacky stuff like cocoa and chocolate, and we can't contain
it versus stuff that you can contain, and we just
don't pass it on the way we used to.

Speaker 2 (01:06):
You know, it's interesting, we're trying to dig into that
a bit more because what we have seen now is,
like you say, there's a few sort of more specific
items with very specific trends, the likes of cocoa, likes
of coffee that have gone up, cooking oil and similar
as well. Quite different though from again year year and
a half ago, when a lot of the annual increases
for costs were quite broad based. There were lots of items,

(01:28):
There were lots of items increasing of larger magnitudes. Now
things seem to be a little bit more case specific.
So I think that's.

Speaker 1 (01:36):
Sort of.

Speaker 2 (01:38):
We've seen the number of items increasing every month is
sort of settled back to a closer to normal level,
we'll call it. At the moment. It's still sort of
higher than it was before, but lower than at the peak.
So all of those trends combined do suggest it again,
maybe we're starting to see a bit more of that
new normal exist.

Speaker 1 (01:56):
Is there any room for the grocery Commission to go aha?
Because I've arrived and I've employ meanted all of my
threats and rules. Look what's happened.

Speaker 2 (02:04):
Well, I think there's a lot of things that are
still going on in the market. I mean, certainly we've
had a conversation with the Communis Commission recently about how
we put our index together because they had some concerns there.
There doesn't seem to be a lot of hard and
fast arta that anyone has to sort of highlight how
specific those concerns might be, but we're trying to look

(02:24):
into there. I think probably what you're seeing is that
there's two things going on. There's one, the general conversation
about grocery competition. Two all of this has happened in
a context of the highest levels of inflation in thirty
years or so. So I think there's probably two things
going on, but we often try to bring the two together. Look,
when we look through these numbers, I think, and you're

(02:44):
seeing this coming through a number of other indicators. A
lot of those input cost pressures are not quite as intense.
The likes of your input cost sorry import costs seem
to be stabilizing fuel costs down. The likes of on
farm costs again and stabilizing. So all of that I
think suggests that we're moving into a bit more of
a new normal state.

Speaker 1 (03:04):
Fantastic Do we look through any of this because I've
been following the veggie market, for example, so fabulous growing season,
plenty of veggies prices are through the floor. But I
mean there's no controlling that is there? So do you
look through that or it is what it is?

Speaker 2 (03:18):
Well? I think, I mean it's funny we especially economists,
use this term sort of look through, and I think
it's often a little bit useless as a word. I
think it's more give regard to what's driving that. I mean,
if you look at the likes of Kumba prices, for example,
you go, well, yes, they're down quite a lot on
a year ago, and that was because the cyclone jecked
them up so much. So sort of you go, what
is sort of a better, more normal, more usual sort

(03:41):
of price. You're definitely right on the likes of the
vegetable and fruits markets. Yes, I think we've got to
have a bit of regard for what those different treadings
might be. But for example, fertilizer use and similar you know,
costs on that will change you know, yields in a
couple of seasons time, so there's a whole lot of
moving parts. I think. I mean, you look at even
the oil mark at the moment, because we often talk

(04:01):
about having to look through those prices. They've jumped the
last couple of days on tensions in the Middle East,
but they're still below eighty US a barrel. So again
context wise, I look at them and I go popped
a bit higher in recent times, sort of more usual
in that eighty dollars range is not a bad place
to be.

Speaker 1 (04:17):
Overall, good stuff, rap, nice to have maybe on the
program again. Brad Olson Info Metric CEO and principal economists.

Speaker 2 (04:22):
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