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Foodstuffs announces cut in food prices amid soaring inflation

By on May 10, 2022 0

Prime Minister Jacinda Ardern on the supermarket duopoly. Video / Mark Mitchell

Supermarket operator Foodstuffs, owner of Pak’nSave, New World and Four Square, has announced it will cut food prices by an average of 10% on more than 100 grocery items.

Starting Monday, May 16, Foodstuffs North Island and South Island will “return prices” on some of its most purchased grocery items to their average between January and April 2021.

The discounts would be implemented at all New World, Pak’nSave and Four Square stores on items such as meat, butter, cheese, vegetables and diapers. Most of the price cuts would be for its Pam’s and Value brand lines.

Foodstuffs said the discounts are expected to result in weekly savings of $500,000 for shoppers.

The price reductions will remain in place until August 14.

Chris Quin, managing director of Foodstuffs NZ, said co-ops were considering the challenge of rising food prices and where rising costs were hitting shoppers the hardest; by using its data insight teams to identify the everyday products that its customers brought most often.

He said the food price reductions on some items were not a marketing stunt.

“It’s not a marketing gimmick. It’s a real saving for our customers and a real cost to our business, as a result of this price drop, our stores will be selling some items below cost. other promotions will continue during this time,” Quin said.

“These are extraordinary times and Kiwis need to be able to afford the everyday items they need in their weekly store over the next few months. As local co-ops, we have a responsibility to step up and our owners of stores are committing to this initiative.”

Foodstuffs’ decision follows that of rival supermarket chain Countdown, which announced last week that it would implement a price freeze over the winter.

Countdown said it won’t raise – or lower – the price of more than 500 essential grocery items over the winter. This included items such as diced tomatoes, butter, cheese, sugar, flour, cold cuts, hot roast chicken, carrots and pumpkin.

Countdown’s chief executive, Spencer Sonn, said the move was intended to “counter the current inflationary environment” and that the company was “receiving millions of dollars in cost increase requests each month from suppliers facing higher fuel, raw material and freight costs”.

The average increase demand from its suppliers was just over 9%, he said.

“As we head into the colder months, the cost of living is undeniably at the top of everyone’s mind,” Sonn said.

“We want to help Kiwis’ money go further despite the pressures everyone is facing with rising costs, and that’s why we’ve committed to ensuring the price of these more than 500 essentials do not change.”

The $22 billion grocery sector – namely New Zealand’s two major supermarkets Foodstuffs and Countdown – has come under intense scrutiny in recent months following market research carried out by the Commerce Commission which found that the lack of competition was problematic.

The duopoly “doesn’t work for consumers”, according to the commission.

It was revealed in March that supermarkets in this country were making more than $1 million in profits every day.

Trade and Consumer Affairs Minister David Clark said consumers would get better prices if there was more competition, and pledged to take action to achieve this.

As a first step, the government would make it easier for supermarkets to enter the market by opening more sites.

Going forward, there would be a new regime around wholesale sourcing, as well as a mandatory code of conduct, dealing with issues such as bargaining power and resolution mechanisms, he said.

Inflation hit a 30-year high of 6.9% for the year ending March. Meanwhile, food prices rose sharply in the March quarter, up 3.1%, led by fruits and vegetables (up 9.3%) and grocery foods (up 2.4%).

Earlier this week, Consumer NZ launched a petition calling for fairer food prices amid major cost increases as inflationary pressures hit grocery store prices.

Consumer NZ launched the petition calling on the government to put ordinary people first – saying excess supermarket profits are a ‘slap in the face’ for Kiwis struggling to put food on the table.

The watchdog launched the petition – Stop the Super Profits – asking the public to support it to show the government and Minister of Commerce and Consumer Affairs David Clark that people want immediate action.

Consumer NZ chief Jon Duffy said he wanted to create the conditions for greater competition in the grocery sector, which will ultimately result in fairer prices at the checkout.