NZ gov eyes cutting prices to ease inflation’s impact

The New Zealand government has unveiled a plan to drive down grocery costs, ordering supermarket giants to provide wholesale supplies to rivals, to ease inflation’s impact.

With consumer price index inflation at a generationally high 7.3 per cent, cost of living pressures are dominating politics across the Tasman.

The government has already given a $NZ350 ($A314) grant to poorer Kiwis, cut fuel excise and reduced public transport fares in response to pressure on household budgets.

Wednesday’s announcement takes aim at the supermarket sector, dominated by two companies – Australian-owned Countdown, a subsidiary of Woolworths, and Kiwi group Foodstuffs.

Prime Minister Jacinda Ardern said New Zealanders who travelled across the Tasman often complained of cheaper prices in Australia.

“They’ve said, ‘Why is it that in Australia within the supermarket you can see such a significant price differential?,” she said.

“We’ve squarely set our sights on this area because we know that this is where a large amount of Kiwis spend their money, putting food on the table.”

A Commerce Commission report into the duopoly suggested a voluntary wholesale regime that would allow opposition retailers market access to each other’s goods.

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Commerce Minister David Clark said the government had decided to go above and beyond that advice, making it a mandatory requirement if retailers do not do it themselves.

“No ifs or buts, greater competition, a wider range and cheaper products will be provided to New Zealanders through these changes,” he said.

Clark said he had already received advice supermarkets were acting on the Commerce Commission report, asking for expressions of interest for wholesale access.

A grocery commissioner will oversee the regime, empowered with the ability to fine retailers.

Ardern said Wednesday’s announcement would “unlock the storeroom doors” to rivals, but inflation’s impact would not go away immediately.

“There is no easy fix for the cost of living but we’re taking a range of actions to ease the pressure on families,” she said.

The changes come as American retail giant Costco pre pares to open its first store in New Zealand, an $NZ100 million ($A90 million) flagship outlet in West Auckland.

The government hopes to entice other players into the market, including Aldi, though the German chain has denied recent claims it is preparing to set up shop in New Zealand.

Clark said he was “aware of other interest” from other retailers, but did not disclose them, citing commercial-in-confidence pressures.

With AAP. (Content has been tweaked for length and style.)