Food price inflation is continuing to ease - though possibly not fast enough for shoppers.
According to Statistics NZ food prices in the month of September were virtually unchanged on a seasonally adjusted basis.
This took the annual rate of food price inflation down to 8.0% from 8.9% as of August. And that's now actually the lowest annual rate of food price inflation we've seen in this country since July of 2022, when the figure was 7.4%.
Earlier this year the Food Price Index twice saw more than 35-year high annual increases of a whopping 12.5%.
The nitty gritty of the latest month's figures includes that food prices actually fell 0.4% in September 2023, but after seasonal adjustment, they rose 0.1%
Stats NZ said in September 2023 compared with August 2023:
- fruit and vegetables prices fell 3.9% (down 0.9% after seasonal adjustment)
- meat, poultry, and fish prices were unchanged at 0.0%
- grocery food prices were unchanged at 0.0%
- non-alcoholic beverage prices rose 1.0%
- restaurant meals and ready-to-eat food prices rose 0.3%.
Food prices make up a little under a fifth of the total composition of the Consumers Price Index, our main recognised measure of inflation. CPI figures for the September quarter are due to be released on October 17, with current expectations that the annual rate of inflation will remain somewhere round about the 6.0% level it was at in June.
ASB senior economist Mark Smith said that over the third quarter of the year, food prices rose 0.8%, "which will contribute 0.15 percentage points to Q3 CPI, marking the lowest quarterly increase since late 2021".
"Driving overall food prices lower were falls for fruit and vegetable prices likely related to the earlier cyclone Gabrielle premium," Smith said.
"The dynamic of widespread price rises looks to be slowing. About 49% of items (52% of expenditure weight) rose in September, but this was compared to 50% of items seeing price falls (47% of weight).
"It suggests that soft household demand and greater consumer resistance to paying higher food pricing might be impacting food retail pricing decisions. If the latter is the case, this is encouraging for the future food price inflation outlook (i.e. lower inflation).
"...It is our view that conditions are in place that should see NZ food price inflation continue to cool heading into 2024, but a difficult period lies ahead for NZ consumers," Smith said.
In terms of the 8.0% increase in annual food inflation, Stats NZ said these were main contributors:
- fruit and vegetables prices increased 1.4%
- meat, poultry, and fish prices increased 6.9%
- grocery food prices increased 10.7%
- non-alcoholic beverage prices increased 8.3%
- restaurant meals and ready-to-eat food prices increased 8.6%.
"The largest contributing food group was grocery food, which includes non-perishables and dairy products," Stats NZ's consumer prices manager James Mitchell said. "Fresh eggs, potato crisps, and lollies were the largest drivers within grocery food."
In terms of the monthly actual fall in food prices for September, Mitchell said decreasing prices for fruit and vegetables, such as tomatoes, cucumbers, and lettuce, contributed the most to this.
57 Comments
It takes several months for a business to bite the bullet and decide to raise prices. Multiply that by 3 or 4 dominoes in the supply chain and you can see why there is quite a lag and momentum to inflation, which is why I bet against you when you said inflation would fall early this year.
The momentum has been falling away the past couple months so I see inflation dropping sooner rather than later. Barring a shock I think we will see 4% within 6 months.
Even when inflation goes to 0%, we are still going to be stuck with the higher prices. The inflation metric can be twisted and really it hides the ever increasing price increases which are of course compounding increases. Its going to take years now of lower than normal inflation to get back to where prices would have been under normal inflation.
The way to crush the bourgeoisie is to grind them between the millstones of taxation and inflation. ......we are all been taken for one giant ride !
Minimize as much as humanly possible your "F.I.R.E" expenditure ..(Finance, Insurance & Real Estate !)
Buy some gold, silver, BTC and ETH !
THE BANKS HAVE IT ALL WIRED - THEY WANT YOU TO HOLD CASH, SO THEY CAN CONTROL THAT CASH
INFLATION IS JUST A NICE WAY OF SAYING "WE ARE GOING TO DIMINISH YOUR PURCHASING POWER OF ALL YOUR INCOMES" !
So basically no change this month?
from the stats page ...https://www.stats.govt.nz/news/food-prices-increase-8-0-percent-annuall…
Monthly food prices fell 0.4 percent in September 2023 compared with August 2023. After adjusting for seasonal effects, they were up 0.1 percent.
So ... Because the "measure" is an annual change - we're being misled by steep price rise back in Dec, Jan, Feb but in fact prices now have been relatively steady since then?
Bread: Back in Jan, Feb the budget bread was $1.90 in both majors. Now down to below $1.60. Wheat prices falling globally. So further falls to come? Yes.
In essence ... food prices have stabilized? Can we get this message out, please.
Some employees are demanding further pay rises!
I have employees asking for pay rises because the minimum wage keeps getting hiked.
Supermarkets can maintain their high margins because they do not compete.
See my comment below. Labour would have won a 3rd term at a canter if they had not let the Commerce Commission do nothing. As it stands the Opposition hasn't had to offer much, the incumbents have done so little with the political capital they were given.
Yes they should have broken the duopoly up. Although I doubt it would change much, if you account for the fact we pay GST on all food unlike AU or GB, then NZ supermarkets are not really that expensive. For example:
2L Milk:
Woolworths: $3.10 AUD = $3.31 NZD + GST = $3.80.
New World: $3.69
Cadbury Dairy Milk Chocolate Block 180g:
Woolworths: $6.00 AUD = $6.40 NZD
New World: $4.79
The following are some examples of foods and beverages that are GST-free (Australia):
- bread and bread rolls without a sweet coating (such as icing) or filling – a glaze is not considered a sweet coating
- cooking ingredients, such as flour, sugar, pre-mixes and cake mixes
- fats and oils for cooking
- unflavoured milk, cream, cheese and eggs
- spices, sauces and condiments
- bottled drinking water
- fruit or vegetable juice (of at least 90% by volume of juice of fruit or vegetables
- tea and coffee (unless ready-to-drink)
- baby food and infant formula (for children under 12 months of age)
- all meats for human consumption (except prepared meals or savoury snacks)
- fruit, vegetables, fish and soup (fresh, frozen, dried, canned or packaged)
- spreads for bread (such as honey, jam and peanut butter)
- breakfast cereals.
It will be interesting to see how MSM spin this. Especially at this time.
Will they actually read the nitty gritty and do as David has done and create an honest headline?
Edited:
NZH: Cost of living: Is this a breakthrough? Food prices fall in September (That's a surprise headline. Content is accurate and helpful ... until you get to the comments by another bank economist. Geez these charlatans are just feathering their own nests! Why don't they just say, "HFL and please vote for the Property Party so we can keep making huge profits from mortgagee's misery. Every utterance they say should come with a disclaimer: "Please note! The opinion comes from a person employed by an institution that is not impartial and their view should be treated with caution. )
I've noticed a shift to more shrinkflation. 120g packs of salad greens are now 100g. So instead of increasing prices by 20%, they decreased the size by 20%.
To me the legacy of this government, either after this election or the next, will be how they pulled every punch when given a mandate to go after supermarkets and building costs.
If Labour had forced through the breaking up of the supermarket duopoly they would have won the election.
Every man and his dog who understands how gst works ha said same. Id go further and say the admin will increase prices. Compliance costs of bringing this in and continually adjusting each return doesn't come for free.
Lab and Nat have the same levels of stupidity this election.
You are correct it is not a 20% decrease in product, but it is 20% increase in price. Working: say it costs $x for 120 grams so the price per gram was x/120 now its x/100
So the so the percentage increase in price is:
x/100/(x/120) * 100 - 100 = 120/100 * 100 - 100 = 20%.
So while the working of the original post is flawed the finally conclusion is correct.
And yet in Nelson employers continue to claim that 'sunshine wages' is a real thing and someone else will take the job if you don't. An absolute farce that has been perpetuated for 30years. Nobody can withstand cost of living increases on 50-55k for a job that pays 75k in much of the rest of the country. Minimum wage has been doubled in the last 10years yet average wages/salaries have been rather stagnant in the region.
If ALDI don't want to come to NZ then The Warehouse Group should approach them for a wholesale deal.
"ALDI At The Warehouse" turn over a section of the store for exclusive on all the ALDI shelf stable home brand grocery lines. Tell Sanitarium and their friends to take a running jump.
Start with some pilot stores in Auckland that have the space to receive shipping containers directly to their loading dock. NZ$2400 would get you a 40' container from the Aldi Sydney distribution centre all the way to the loading dock of an Auckland Warehouse store. You can get a lot of Wheat Biscuits in a 40' container.
The duopoly would crap themselves.
The supply chain for Frozen and Chilled international is a bit more complicated. But not impossible. Start with the shelf stables to prove the concept and expand from there. There are plenty of Warehouse stores in Auckland that are in big box locations with Butchers and Green Grocers in the same complex. Make those the pilot locations. The Warehouse apparently are selling Sanitarium Wheatbix for $6 a box. They say that is at cost. Plenty of people are willing to make a visit to get those.
I go to a separate shop now just to buy frozen chickens. Plus I get my vegetables from one of two independent fruit & veg shops. So my shopping trip is now 3 stores instead of one. The warehouse is next door to the supermarket, it wouldnt be that much of an effort to go in there. If someone wanted to set up a store selling eggs cheap, I'd also be shopping there. If you arent shopping around these days, you cant really complain about the prices you are paying at the supermarket. Things won't change until we all change our habits.
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