Stats NZ's food price index rose an annual 1.2 percent last month. Photo: Suppled / Foodstuffs
Grocery co-op Foodstuffs is defending grocery price differences between here and OECD countries, pointing out New Zealand's 15 percent goods and services tax (GST).
While Stats NZ's food price index rose an annual 1.2 percent last month, Foodstuff said its co-ops - New World, Pak'nSave and Four Square stores - recorded no increase for their comparable basket of goods.
"As two external reports highlighted recently, global factors play a big role in New Zealand food prices," Foodstuffs managing director Chris Quin said.
"What others who compare prices here with those overseas tend to overlook, is most OECD countries have lower or no GST on some or all grocery foods."
"For example, Australia doesn't charge GST on meat, fish, produce, cheese and eggs, plain milk and cream, bread and spreads, bottled water, tea and coffee, cooking ingredients and oils, or infant formula.
"Likewise, in the UK and Ireland they don't have GST on most grocery foods."
He said the inclusion of GST in prices made a difference at the checkout.
"Had the GST exemptions in those three countries been applied to New Zealand in a recent study by Australian researchers, who compared a basket of over 40 products at each country's two main supermarket brands, the total price of the Pak'nSave basket would have been lower than Australia's and lower than Ireland's, and less than 10 percent more than the UK's."
He said it was important to consider all costs when making comparisons.
"To be clear, this is not a call to remove GST from food in New Zealand, as we think our simple low-cost tax system makes sense," Quin said. "But it is important to be conscious of all factors at play when comparing prices here to overseas."
He said about 13 cents per dollar spent at co-ops was GST, less than four cents per dollar was net profit after tax, and about two-thirds was the cost of buying the product from suppliers, which rose an annual 3 percent on average in September.
He said Foodstuffs will keep tabs on prices charged in comparable overseas markets overseas over the coming months.
"Because any valid comparison needs a robust methodology that carefully considers the basket of goods included, their weights and unit measures, different sales taxes and fluctuating exchange rates, and should be conducted over an extended period.
"At the same time, our co-ops will continue to challenge ourselves to do what we can as two regional New Zealand businesses to find greater efficiencies, which was the major driver behind our proposed merger, and one of the best things we can do to provide our customers with savings at the checkout."
The Commerce Commission recently pushed back on the proposed Foodstuffs merger of the north and south co-operatives, deciding it would have harmed competition and was irrelevant whether it would have made the operator more efficient.