Brad Olsen: Informetrics Principle Economist on the easing inflationary pressures in supermarkets

There are positive signs of inflationary pressures easing in supermarkets. 

Latest data from Infometrics and Foodstuffs shows suppliers charged supermarkets 1.8% more last month than the same month last year. 

That's the lowest increase in more than three years. 

Infometrics Chief Executive Brad Olsen says many fruit and vegetables have been getting cheaper, while dairy prices are driving costs increases. 

He says chocolate, coffee, and noodles are also seeing jumps. 

Olsen told Mike Hosking that it’s not perfect, but it’s in a much better position. 

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Episode Transcript

Speaker 1 (00:00):
More good news for the economy. So we got supermarkets.
They've seen the lowest increase in supply costs since twenty one.
This is the Grocery Supplier Index. Supplies charged on average
one point eight percent more on the year to February,
so that's not a bad number. That's the first time
we've seen anything below two percent since July of twenty one.
In for metrics principle, economist Brad Olsen's with us. Brad,
very good morning to you.

Speaker 2 (00:19):
Good morning.

Speaker 1 (00:19):
Have we settled into a stable period here?

Speaker 2 (00:23):
I don't know if we'd yet call it stable only
because the last couple of months the annual increase has
been slightly above two percent, so there's still a little
bit of volatility, but it's volatile around two percent. So
that's a lot more encouraging that, you know, either side
of that two percent line, it does look like those
supply cost increases are at a more sensible level when

(00:44):
certainly in line with where things have been in the
back before inflation rarely got rip roaring. Those supply costs
are still increasing, they're just a lot slower, and I
think that is generally helpful when it comes to that
price stability probably most importantly as well, we we are
still seeing that the likes of produce costs are showing
a bit more of their normal seasonality. You know, when

(01:06):
there has been a good growing season, there's more supply
on the market. That generally means that costs aren't quite
as high. On farm, costs have continued to come back.
So all of that is encouraging news. It's not perfect,
but it's in a much better position.

Speaker 1 (01:20):
And can we explain, like dairy will be up because
we're selling more at higher prices, chocolate, coffee, we know
the story with climate, et cetera. Can we explain all
of this or we're not there yet either.

Speaker 2 (01:31):
A lot of things. I think we can. We do
have a fairly good understanding of why they're going up.
And I think what the difference is is go back
a couple of years and just that everything was increasing.
It's sort of a fairly similar but rapid clip. Now
you've got a few more specific items that are increasing
by often quite large magnitudes, but they are often driven
by global supply things, So you know, you note the

(01:54):
likes of dairy. We saw again this month that the
likes of butter was a key driver but also so
rising beef prices globally means that you know, there's a
bit more pressure on what you pay for beef in
the soupermarkets locally. But and I think this is where
it got interesting. You know, the likes of coffee and
chocolate we had, you know, we've got good explanations we've

(02:15):
seen that supply globally has been restricted. But a few
more items as well that we just keep our eyes
on a bit more cautiously, the likes of noodle, spaghetti,
baked beans. Those are not generally quite as inflationary, and
so the fact that there's been an increase, we just go, look,
there's obviously still a bit of pressure in the system.
It's in a better position, but we haven't taken our
eye off the ball yet.

Speaker 1 (02:36):
Those two and a half thousand products have increased in cost.

Speaker 2 (02:38):
Is that normal?

Speaker 1 (02:39):
A lot?

Speaker 2 (02:40):
Not many. It's sort of in a lower position for
what a February has been the last couple of years.
I think, you know, the reference point is twenty twenty
one at the moment. That's when things are a bit
more normal, bit more stable. So the number of increasing
items isn't nearly as bad as it has been the
last couple of years. It's still afo. It was back

(03:01):
twenty nineteen, twenty twenty sort of thing. But again I
think that's where we're trying to find this new normal.
We're not going back to twenty nineteen, but also we're
not staying stuck in twenty twenty two. So sort of
back in the right realm, I think is the position.
We'd say it.

Speaker 1 (03:15):
Is always a pleasure. Bradley go Well Brad do Wlson
in for Metrics Principal Economists. For more from the Mic
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