A new report says the current grocery sector reforms are unlikely to deliver significant benefits for consumers, with stronger measures needed.
The report has been released the day after it was announced Stats NZ's food price index rose 12.5 percent in the year ended April, the highest annual rate since late 1987.
The main drivers over the year were a 14 percent rise in grocery prices, and more than 22 percent for fruit and vegetables prices.
The country's grocery sector is dominated by Countdown, owned by Australia's Woolworths, and local co-op Foodstuffs, which runs the New World and Pak'nSave brands.
The grocery sector came under the spotlight last year after the Commerce Commission's market study into the sector.
The government responded to the study by advancing a raft of recommendations, including an independent regulator, improving access to the wholesale market and collective bargaining for suppliers.
A Westpac NZ Economics report looked at whether those reforms would generate enough competition and improve consumer outcomes.
Its industry economist Paul Clark, who wrote the report, said his view was that the government's changes were unlikely to generate sufficient competition and deliver significant benefits to shoppers.
"On balance, we think that stronger measures would be needed to achieve these outcomes, including breaking up the existing duopoly that currently dominates the sector.
"This would involve some tough policy trade-offs, including potentially higher prices in the short term as economies of scale were lost.
"Longer-term, however, we would expect the benefits of a more level competitive playing field to be reflected in better prices, a wider range of goods and an improved customer experience."
Clark said any reforms that improved competition would help improve the "responsiveness of grocery prices to changes in consumer demand".
He said another strong measure to weaken the duopoly was to "de-link" the two outfits away from wholesale.
"They shouldn't be owning their own wholesalers, even their own growers for that matter."
