To the average punter, expensive groceries is yet another piece of straw on top of a heavy load. New Zealand’s inflation has gone up 5.9 percent from the December 2020 quarter to the December 2021 quarter, and predictions now say we could be looking at a 7.4 percent peak in the second quarter (up from earlier estimates of 6.4 percent).[i]

The cost of the essentials – food, fuel, and putting a roof over your head – have skyrocketed in the past few years. While world events like COVID or Russia’s war on Ukraine don’t help with supply chains, it’s hard to pick one cause for the surging costs.

Just the two of us…

Earlier this week, the Commerce Commission published its findings on the grocery sector. We saw a draft of this last year indicating that prices were too high, and the duopoly of Woolworths (Countdown) and Foodstuffs too exclusionary for new competitors.

The final version we saw on Tuesday comes with additional recommendations to the Government for reform within the sector – and highlights the whopping $430 million a year the supermarkets are making in estimated excess profits each year.

Shoppers, of course, will already know that the current supermarket set up isn’t working well for them. There’s been a 4.5% increase in annual food prices from December 2020-21, spelling the biggest increase since 2011.[ii] You’ll likely have noticed that your money just isn’t stretching as far as it used to in the trolley, with cheese hitting around $14 for a no-frills 1kg block and half a cauliflower coming in at over $5.

The recommendations from the report include making more land available for new grocery stores by banning restrictive land covenants and exclusivity lease clauses, improving access to groceries for competitors by requiring major retailers to fairly consider any requests, and monitoring conduct around pricing and exclusive supply agreements. They also proposed a dispute resolution scheme and an industry regulator.

It does stop short of actually breaking the duopoly, though, instead recommending reform which seems to be based on them behaving well.

If you’re worried the Commerce Commission isn’t going far enough in their good faith recommendations, you’re not alone. Consumer NZ has stated they are disappointed in the scope of the recommendations too.

Consumer NZ chief executive Jon Duffy said in a statement that while they were happy to see the supermarket sector be put under a spotlight, they were worried about what will happen when that spotlight fades – and whether supermarkets will revert to usual practices, as much of the recommendations depend on a code of conduct and good faith.[iii]

The Commerce Commission, however, is optimistic. So is the Government, with the Minister for Commerce and Consumer Affairs David Clark indicating there would be swift action to enact change. We might even see some items come into law by the end of 2022.  Although sceptics question the Minster’s desire with his slow response to the growing evidence of issues with the new lending laws of December 2021…

This isn’t the first time New Zealanders have been impacted by lack of competition in major retailers – does anyone remember the days of Vodafone and Telecom’s vice grip, before other options like 2Degrees, Slingshot or Skinny came on the market? We can only hope this duopoly will crumble in the same way, leading to more (and more affordable) options for consumers.

Penny-pinching tips

1.       Make sure you have a thorough understanding of all your incomings and outgoings. See if your existing bank or KiwiSaver scheme has a free option for budget tracking before you buy any apps. For example, if you’re in the Booster KiwiSaver scheme there’s a free feature called mybudgetpal which is quite handy for categorising your spending. It has an automated bank feed with most institutions.

2.       Shop around. Whether it’s for your phone bill, your groceries, or gas – now is the time to find any specials and take advantage of them. Apps like Gaspy can tell you where the cheapest gas within a certain distance is, for free.

While I haven’t yet seen a one-stop-shop for comparing grocery prices, you could fill a cart online at various retailers (the main players all have online stores) and see which comes out cheaper if you’d really like to do a direct comparison.

3.       Set up money dates. If you have a partner, set up regular dates to discuss your financial situations and any goals you may have. It’ll help keep you both on the same page (and hopefully on track to your goals).

Even if you don’t have a partner, setting up regular review sessions for your own finances can be helpful to stay across your situation and any tweaks you may want to make.

Seeking financial guidance

Feeling in control of our finances is incredibly empowering. Remember there are all kinds of resources available to help you find your best options and create your best plan, whether that be keeping your head above water or building a nest egg for the future.

If your plan is more around future-proofing and growing wealth, there’s options for that as well. The best place to start is by sitting down with trusted professionals to discuss your individual circumstance and goals.

·                     Nick Stewart is a Financial Adviser and CEO at Stewart Group, a Hawke's Bay-based CEFEX certified financial planning and advisory firm. Stewart Group provides personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver solutions. 

·                     The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from an Authorised Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

[i] https://www.nzherald.co.nz/business/inflation-forecast-to-go-even-higher-what-you-need-to-know/3DIEERUHBIFSNRGW2BT4PQNT3Q/

[ii] https://www.theguardian.com/world/2022/mar/09/everything-is-rising-new-zealanders-make-painful-sacrifices-as-living-costs-skyrocket

[iii] https://www.scoop.co.nz/stories/BU2203/S00173/consumer-nz-feels-supermarket-report-recommendations-should-go-further.htm