It won't come as a shock to shoppers, but the latest Food Price Index released by Stats NZ on Thursday morning shows food prices continued to rise in December by 11.3% annually, coming close to a record rise of 11.4% recorded in April 1990.
Grocery food prices rose 11% in December when compared with the same month in 2021, and fruit and vegetable prices rose a staggering 23% annually. Kiwifruit, potatoes, and tomatoes influenced this movement the most, Stats NZ said in a release.
Stats NZ said the increases were due to rises "across the board" in all the categories measured.
“Increasing prices for cheddar cheese, barn or cage-raised eggs, and potato chips were the largest drivers within grocery food,” Stats NZ consumer prices manager James Mitchell said.
Meat, poultry, and fish prices increased by 11%, prices for non-alcoholic beverages increased by 7.3% and restaurant meals and ready-to-eat food increased by 7.8%.
The Stats NZ Food Price Index release for November saw the annual rate of food price inflation hit 10.7%.
That was an increase on the previous month of October, where prices rose 10.1%.
Foodstuffs NZ managing director Chris Quin, a co-operative which has the New World, Pak ‘n Save and Fresh Collective supermarket brands, said cost pressures were present for everyone growing, manufacturing and retailing food in New Zealand.
“Domestically, input cost pressures are continuing for suppliers who are facing higher costs to grow, pick and pack produce for market, with adverse weather events still the wild card this year.”
He said Foodstuffs had imported more fresh produce than in previous years because it couldn’t buy it in New Zealand.
Foodstuffs has introduced its own price index, but this index shows how much the supermarket retailer's suppliers have raised prices.
Its latest edition, also released on Thursday, found the average cost increase from suppliers to the Foodstuffs co-operatives on the same products measured in the Food Price Index basket was 12.2%.
Foodstuffs said there were 30% more cost increases in December compared to the same time last year.
“Other factors impacting food prices include the tight labour market, increasing wages, the weaker NZ dollar, increasing fertiliser costs for suppliers, and the upcoming end to the fuel subsidies, but that picture might change rapidly this year,” Quin said.
Mark Smith, senior economist at ASB Bank, said the bank hoped annual food price inflation had peaked, or was close to its peak, but the risk is that the current upward momentum in food prices takes longer to slow.
“Food price rises remain ingrained, and it appears consumers are cutting back where they can. Conditions are in place that should see NZ food price inflation cool over 2023, but a difficult year lies ahead for NZ consumers.”
He said price rises were elevated despite December being a month when more pre-Christmas discounting takes place.
Westpac's senior economist Satish Ranchhod warned on Wednesday that for NZ many families the pressure on finances is going to become much more intense over the year ahead.
He said high levels of inflation are eroding spending power, borrowing costs are pushing higher and many have seen the value of their assets falling over the past year.
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