Chris Quin: Foodstuffs managing director on claims GST is pushing up food prices - not inflation

Foodstuffs is pushing back on claims our groceries cost more than the rest of the world.

Year-on-year inflation for comparable products has remained flat on 0 percent, according to the co-op.

Blame is being put on GST for pushing up prices – Australia, for example gets, meat, fish, produce, milk and more GST-free.

Foodstuffs New Zealand managing director Chris Quin joined Mike Hosking.

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Episode Transcript

Speaker 1 (00:00):
Got some new numbers around the cost of your groceries
year on year. Here's the claim. Year on year inflation
for comparable products has remained flat zero percent. So if
there's a mismatch, the argument is then we you know,
when we make international comparisons, the fingers being pointed at GST.
For example, in Australia they have some GST food free food.
We don't hear food stuff to New Zealand Managing director
Chris Quinn is with us. Chris, very good morning to you.

(00:22):
This ongoing thing that I think is a media thing
that we go, oh, look, I can buy some oranges
in London so much cheaper. Is there any point in
that given their different markets, different products, different times, different currencies,
et cetera.

Speaker 2 (00:35):
I think that's an important discussion because there's so many
differences in what makes up the cost of food. You know,
Basically in New Zealand, a dollar of retail on shelfs
about two thirds the cost of the product from suppliers
about thirteen cents GST, and then the rest is the
cost for us to run our business and pay thirty
nine thousand people across the country. So it's important when

(00:56):
comparisons are made that. Factors like the fact that New
Zealand has a very simple tax system where gest is
charged on everything. That means it's a low cost system
to make work, and that you have to take it
in context of overall tax all matters when you try
to compare food price.

Speaker 1 (01:11):
Yeah, difficult with that is that people don't here's the
first text, Mike. I'm astonished that it's noted that food
is not going up in Woolworths alone. I've seen increases
of fifty cents to a dollar in a lot of
items are regularly by in the last two weeks. That's
what people see, isn't it what was in their basket,
not an average basket.

Speaker 2 (01:27):
That is correct, and that's why the comparison that we
do that saw us have a result in September of
zero percent compared to zero September a year ago, is
based on the FDI basket, the Food Price Inflation basket
from the Department of SATs and we follow their basket
because it's the one they publish. So for New Zealand
overall that was one point two For food stuffs that

(01:49):
was a zero month, and for the cost of those
goods to us up about three percent in the month.

Speaker 1 (01:54):
Ah, so that brings in the supplies before I say
something about the supply, So you look at olive oil,
for example, that's up fifty eight percent, that's that's I mean,
there's a lot of stuff that needs to go down
to officit. Something that's gone up fifty eight percent. That's fair,
isn't it.

Speaker 2 (02:08):
That's right? And also you've got to weight the volume
somehow to a basket so that you get effect on
what does it cost me to go shopping, which is
what New Zealand households care about.

Speaker 1 (02:17):
Which is the really interesting thing since we've last had
you on the program, the Comcom's rule, But we've also
got the supply situation. Is the supply situation broadly under
control now?

Speaker 2 (02:30):
In terms of supply, yes, it is. So we're getting
good supply and we're able to get shelves are full
and looking a lot better than they might have a
year and a half or two years ago. What about
price in terms of in terms of supply costs, they
are continuing. You know, we're still getting three thousand or
so price increases a month, but they are more like
two to three percent than some of the numbers we've

(02:51):
seen over the last year or two. So we think this,
you know, the feeling that it's going to settle somewhere
around a two in terms of price trend is stronger
and stronger.

Speaker 1 (03:02):
Okay, how many of those so, how many of those
increases that you talk of are because they say, oh, well,
it's the red sea, I can't do anything about it,
as opposed to the person going, I just feel like
charging more.

Speaker 2 (03:12):
Look, there is a lot of pressure on cost globally.
So you mentioned you know, olive oil is one that's
up nearly three times in the last couple of years.
You know, coco that goes into chocolate. Those sort of
things definitely had been under global price pressures, the global
events and all of the things that make that up.

Speaker 1 (03:30):
Okay, and then we come to the merger. It's off.
What are you going to do?

Speaker 2 (03:34):
Look, that was one of our best plans in terms
of how we further reduce cost and reduce food price.
There was huge benefit and the removal of duplication in
that proposal. We don't know the reasons yet why the
Commerce Commission have declined it. We don't get that till
the twenty third of October. We'll review that properly and
based on what we see there will de side on

(03:55):
a next step and whether we feel there are reasons
there why we failed the legal two or if there
isn't then we have the option to appeal.

Speaker 1 (04:02):
All right, we'll talk about it, saying I'm sure Chris
appreciate it. Chris Quinn, who's The Foodstuff's New Zealand managing directory.

Speaker 2 (04:07):
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