Brad Olsen: Infometrics Principal Economist on supermarket supply costs rising, cost of living for voters

It's good news for supermarkets: In the year to March, supermarket supply costs have risen by 2%. 

However, a survey out this morning shows that one in four people are struggling financially and the cost of living remains the main issue for voters. 

Infometrics Principal Economist Brad Olsen talks to Mike Hosking about the survey. 

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Episode Transcript

Speaker 1 (00:00):
More insight into the economy some decent use, I think
from supermarkets in the year to March supply costs of
risen two percent, the year to March supply costs of
risen two percent. It coincides ons the weird bit with
a survey also this morning that tells us one and
four are struggling financially, which I suppose men seventy five percent,
three and four aren't, and that cost of living remains
the number one issue for voters now. Informetrics principal economist

(00:21):
Brad Olson's back, Well, this Bradley.

Speaker 2 (00:22):
Good morning, Good morning.

Speaker 1 (00:24):
So that grocery supply cost at two percent, that's well
within the inflation band. Is this a trend? Do we
seem to have settled?

Speaker 2 (00:32):
We do seem to have settled a bit more. There's
been a little bit of volatility around the two percent mark,
but the fact that it seems to be a bit
better contained is of course reassuring. At the same time,
looking through some of the cost changes that we've seen
in March and to be feared the last couple of
months as well, it is some of those often more
important items to households that are still increasing and increasing

(00:53):
at a rapid pace. So you look at the likes
of dairy, your milk costs, your cream costs, your cheese costs,
all of those are up. The likes of you your
other important stuff chocolate and coffee are also increasing. Olive oil,
you know, a little bit better in the last month
or two, but overall still high. So although I think
the pace of change is generally a lot less intense

(01:14):
when we are compared to when we had inflation really
running rampant, the fact is these costs are still increasing
and that's still sort of accumulative overall increase. That still
makes it tough. I think when households are looking at
their budgets that things haven't necessarily got cheaper. They just
haven't been increasing at the same pace.

Speaker 1 (01:30):
But unlike previous times where costs were simply passed on
and supply chains were a problem and none of us
knew what the hell was going on with chocolate and
dairy and cocoa and coffee. And so we can explain
it because there's rationale. But you may not like it.
But there's a rationale behind it, though, isn't.

Speaker 2 (01:47):
It There is? I mean, especially if you look at
some of those overseas supply issues the likes of your
coffee and your cocoa. I mean, people one still desperately
want that stuff. It's important in the morning and after
when you need a sweet treat at night, and has
been driven by the fact that there's just not as
much production out of some of those key distributors around
the world for the likes of dairy and even meat. Increasingly,

(02:08):
you do see that there are those further price increases
coming through. That's because global demand is strong, and again
that's a bit of a double edged sword. On one hand,
it's good for our exporters that they're getting those higher
prices on the international market, but it also means that
domestic prices generally have to push higher to try and compensate.
Otherwise exporters would send everything overseas and there wouldn't be

(02:29):
enough left at home. So there is again, I think,
a real challenge there. You're right though, that it is
a bit more explainable for households though, and you can
see this in the survey results this morning. That still
is sort of cold comfort. You can explain it, but
it still doesn't mean why life is any easy now.

Speaker 1 (02:43):
I get that. Having said that, do we have a
mentality now where the cost of living is just a
thing because we've decided it is, even though there might
be evidence i e. Two percent that it's not what
it once was.

Speaker 2 (02:56):
I think that's absolutely true. We've got a much keener
focus on and that's sort of what happens when it
gets out of control, and for a long time, no
one had to worry about it quite as much. I
think also, though, again, that the cost of living challenge
that a lot of households have is that I do
wonder if a lot of people are still waiting for
the cost to go back to what they were in
twenty nineteen, and just simply they won't. Everything is a

(03:18):
whole lot more expensive. But also we do concentrate a
lot more on higher prices or costs than lower and
we also don't take into account quite as much the
income effects. So yes, prices are higher, but people's incomes
have also increased what came through a bit more on
the survey though, and I think this is sort of
a bit of a trend for this year. Although you're
going to have more people that are going on to
sort of lower mortgage rates, you've got more people that

(03:41):
again are seeing lower inflationary pressures. At the same time,
they're a bit worried about their jobs still, and while
that persists, that's still going to weigh on the minds
of households. So everyone's pretty cautious. You throw in a
global trade war and I think everyone's just still a
pretty a lot on edge.

Speaker 1 (03:56):
If you will, good on your Bradley good to having
on the program, as always got to trust him. I mean,
surely if you did a media survey on do you
trust Brad Olson, they what's to argue with.

Speaker 2 (04:05):
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