Supermarkets shaping the food price story

Recent media reports have blamed rising grocery prices on supermarket suppliers and even shoplifters. One business journalist is calling on the media to focus on the market power of our supermarket duopoly, now facing a law change to improve competition and lower prices. Recent media reports have blamed rising grocery prices on supermarket suppliers and even shoplifters. One business journalist is calling on the media to focus on the market power of our supermarket duopoly, now facing a law change to improve competition and lower prices.A recent The Otago Daily Times headline was definitive about the cause of the skyrocketing cost of food in New Zealand: Supplier cost still driving supermarket prices.Reports from Stuff, the Herald, Newshub and RNZ made the same point, based on the monthly Grocery Supplier Cost Index produced by the economic consultancy Infometrics.News reports of the findings of last August's Index credited supermarkets with putting up their prices by only 6.1 percent - well below an 8.7 percent increase in their suppliers' charges.But while most of the reports note the Index is a Foodstuffs-Infometrics collaboration, few treat the fact that it's paid for by a supermarket giant as a red flag or reason for caution over its findings. Neither do they mention the big two supermarket chains have for years kept a tight lid on suppliers' charges. They enjoy a combined 90 percent share of the market for grocery shopping in New Zealand.Supermarket suppliers aren't the only ones getting the blame for rising food costs in the media.A Newshub story this week featured a startling video of an attempted Countdown theft and claimed "the illegal practice is hitting shoppers in the pocket." "There seems to be a lot of people who feel they can load up trolleys and walk out of stores with impunity. It's costing households hundreds of dollars," Retail NZ's Greg Harford told Newshub.Last year Harford told Stuff that retail crime cost every household $800 a year, and 2017 reports put the cost of retail crime at $1.2 billion a year. But only a portion of that would affect supermarkets, and the recent story from Newshub contained no hard data on how much theft is really costing those outlets or their customers.Consumer NZ has a different opinion on the root cause of the high and rising prices. It says the big retailers' own commercial practices are at the heart of the issue, and is campaigning for changes. "Every day, the major supermarkets are making more than $1 million in excess profits" because of "high prices, high profits and high barriers to enter the market," it says. …Go to this episode on rnz.co.nz for more details