The numbers before the war
Forget the idea that food inflation was yesterday’s problem. Stats NZ data for February 2026 shows food prices up 4.5% year-on-year, with the categories that matter most to households running far hotter. Fruit and vegetables climbed 9.4%. Meat, poultry and fish rose 7.5%. Beef mince hit $24.46 per kilogram, the highest since records began in 2006. Sirloin steak averaged $44.71/kg, up 21.5% annually. A 250g block of chocolate was up 20.3%.
January was worse on a monthly basis: a 2.5% jump, the largest in four years. All of this predates any Middle East disruption.
Supplier costs are climbing and margins are thin
The Infometrics-Foodstuffs Grocery Supplier Cost Index tracks list costs across more than 60,000 products in 500-plus stores. In February, supplier costs rose 2.3% year-on-year, with produce department costs up 2.9%, the fastest pace in two years. Supplier costs represent two-thirds of on-shelf prices, so what moves upstream moves to the shelf.
Infometrics CEO Brad Olsen warned of “lingering concerns around cost pressures in 2026, with continuing domestic inflationary momentum”, even before factoring in the conflict.
Transport is the transmission mechanism
None of the February data captures the Iran war’s impact. Olsen told RNZ the effect is expected to flow through to food prices within three months. The channel is transport: “10 percent of non-wage input costs come directly from transport, so it’s a fairly big line item,” he said.
The buffer that might have absorbed some of this has eroded. “Margins do look a lot thinner now over the last couple of years, so we do expect a more immediate pass-through,” Olsen said. When transport operators have nothing left to absorb, costs move fast.
Retail NZ chief executive Carolyn Young confirmed the breadth of exposure: “It will affect everything that needs to be delivered, whether they be by road, sea or air.” Her estimate: the conflict could add roughly 0.5% to overall NZ inflation.
Supermarkets are not just passing through costs
Consumer NZ head of research Gemma Rasmussen raised a sharper question: whether supermarkets use disruption as cover for margin expansion. “Countless factors contribute to the final price. That makes it extremely difficult for consumers to know whether they are paying a fair and accurate amount,” she said.
The evidence is uncomfortable. During Cyclone Gabrielle, a produce item went from $3.50/kg retail to between $9 and $14/kg, while wholesale only rose from $1.99 to $4.50/kg. Consumer NZ also found one frozen product where a major supermarket was making a margin close to 60%, compared to 25% at alternative retailers. Australia is introducing an excessive pricing regime for large supermarkets from 1 July 2026, with penalties up to A$10 million or 10% of turnover. New Zealand has nothing equivalent.
The business squeeze is already here
Groceries do not exist in isolation. Domestic airfares were up almost 11% and electricity and gas up more than 13% before the conflict began. Businesses absorbing food cost increases are simultaneously dealing with higher energy and transport costs across the board.
For hospitality operators, food manufacturers, caterers, aged care providers, and anyone with a material food cost line, the dilemma is the same one facing supermarkets: absorb or pass through. Most lack the pricing power of a duopoly retailer. Consumers are already switching from fresh to frozen vegetables and cutting premium proteins. One shopper reported that 500g of good quality mince that used to cost $10-$11 is now $14.
The three-month lag Olsen identifies is the planning window. Businesses still pricing menus, contracts or procurement on last quarter’s input costs are exposed. The transport cost spike is not speculative. It is in the pipeline. The only question is how much of the chain absorbs and how much lands on a consumer whose wallet is already thinner than it was.
Sources
- NZ Herald: Beef mince and steak prices surge as annual food costs climb 4.5%
- RNZ: Supermarket price warning issued by Consumer NZ
- RNZ: Shoppers struggle with rising costs of meat and veges
- RNZ: Shoppers warned to brace for higher grocery prices
- Infometrics: Grocery Supplier Cost Index – January 2026
- Newstalk ZB: Brad Olsen on food price growth and Iran war impact
- Newstalk ZB: Carolyn Young on retail price increases
- NZ Herald: Food prices rise 4.6% annually, January monthly increase biggest jump in four years
- NZCity: Food costs kept climbing even before the Middle East war