A leading economist says there is hope on the horizon for New Zealanders despite new figures showing supply costs to supermarkets increased again as the cost of living crisis continues to bite.
The latest Infometrics-Foodstuffs New Zealand Grocery Supplier Cost Index (GSCI) has seen another increase in June - rising 8.3 percent.
This is down from the 10.3 percent rise recorded in March, 10 percent in April and 8.8 percent in May.
The index tracks how much supermarkets are charged to buy the goods they put on the shelf.
Infometrics Principal Economist Brad Olsen told AM Early on Monday 4000 items saw an increase in cost in June - two and a half times above the normal levels seen in 2019 and 2020.
Olsen told AM Early host Nicky Styris prices and costs haven't gone down, but supplier cost increases have started to slow.
There are a multitude of factors causing the increases Olsen said, including cost pressures that are still working their way through the system.
"You look at the likes of higher fertiliser costs and similar over time for farmers and others in the primary sector, those costs might have happened six months ago, but they are still working their way through the system," Olsen said.
"They're still influencing how costs are changing when it comes to things further up the supply chain, like goods going into supermarkets."
But Olsen said over the last month there hasn't been any real change in diesel prices, which is important for the cost of transporting goods across the country.
One area that the index focused on was input costs, which Olsen said is still rising but not at the furious rate as seen previously.
"So imported food costs were up 13 percent in the March 2023 quarter, again [that] still looks like a big number, however, it was 26 percent per annum if you go back to December 2022 and all of that sort of shift in momentum gels with what we've seen from the likes of the world banks, commodity prices, which showed that food prices dipped 3.5 percent in June alone," Olsen explained.
"So again, all of that suggests that look, prices are still high, costs are still high, but maybe not quite as much momentum behind them now as there was before."
The positive news for Kiwis is Olsen believes where New Zealand was six months ago was much worse, with costs increasing at a much more intense and frantic pace.
But Olsen said an increase in sugar prices globally has contributed to higher inflation in some areas, as well as bakery items, grocery and chilled foods all seeing larger increases.
"When we broke down those numbers further, it was the likes of some of your dairy and chilled meats, but also breads, grains and other sorts of noodle items, for example, that are still seeing higher cost and prices," he said.
"I guess the general outlook here is there is still a lot of pressure behind food prices because of those supply chain effects going through the system, but these numbers do suggest that perhaps through the second half of 2023, we might not see the same intense levels of higher prices at supermarkets as before."
While Olsen was trying to put a positive spin on another increase in supply costs, he warned Kiwis aren't out of the woods yet.
"We're certainly not seeing that same sort of large monthly gains that we were previously seeing. When we saw those come through, it really did send alarm bells going through... I'm certainly not saying we're out of the woods," he told AM Early.
"We know, for example, that in the month of June alone, there were 4000 items that saw an increase in cost that was two and a half times the normal levels that you saw around 2019, 2020."
Watch the full interview with Brad Olsen in the video above.
