No relief in the supermarket. Stats NZ has released June's annual Food Price Index and it shows a 12.5% increase year-on-year.
Stats NZ said the annual increase was due to rises across all the broad food categories it measures.
Fruit and vegetable prices, impacted by poor weather for growers, rose by 22% in June 2023 when compared with June 2022.
Grocery food prices increased 12.8%, while restaurant meals and ready-to-eat food prices increased 9.2%.
Meat, poultry, and fish prices increased 11.0% annually while non-alcoholic beverage prices increased 9.7%.
"Increasing prices for fresh eggs, six-pack yoghurt, and cheddar cheese were the largest drivers within grocery food,” Stats NZ consumer prices manager James Mitchell said.
The second-largest contributor to the annual movement was fruit and vegetables. The increase in this group was driven by tomatoes, kūmara, and potatoes.
In May the index showed some signs of weakening. Annual food prices increased by 12.1% in the year to May after food prices in the year to April rose 12.5%, which was the highest level in New Zealand since September 1987.
Grocery food prices rose by 12.7% in the year to May while fruit and vegetables prices increased by 18.4%.
Online supermarket startup founder Sarah Balle said she was starting to see minimum wage increases flow through and "the pre-emption of higher transport costs flowing through since the removal of fuel levy subsidies".
The Supie founder said fresh produce prices continued to increase significantly, which she believed was driven by some of the worst conditions for the horticulture sector. Growers faced lack of labour driven by poor policy settings not supporting the sector, which meant supply was constrained by what could be picked.
Balle said many growers the firm had spoken to had produce going to waste in the field as there wasn't sufficient labour to pick it – this was not due to low wages. She said they also faced significant cost increases related to land, high input costs and increased regulation.
Balle said the supermarket industry in NZ was dominated by two companies.
"Duopolies have poor outcomes for consumers, and I believe this is significantly contributing to food price increases for Kiwis. Again, the government needs to do more to increase competition in the sector – Kiwis need relief now."
The Government's new legislation, the Grocery Industry Competition Act, came into force this week.
It brings in a new regulatory regime for the sector including a grocery supply code of conduct and opens up the wholesale operations of Foodstuffs and Countdown to competitors. Grocery Commissioner Pierre van Heerden, who will take the lead in monitoring competitiveness of the grocery market, started in his role today.
Balle said Supie had spoken to growers who had said they were moving away from the business because it was no longer sustainable.
"This means that as a country, we will likely see more fresh produce being imported, increasing food miles and carbon emissions. This is disappointing from a food security perspective."
The government should be doing more to prevent this from occurring, she said.
Retailer Foodstuffs issued its own price index earlier in the week, which it says measures the change in the cost of grocery goods charged by suppliers for about 60,000 items sold to the Foodstuffs North Island and South Island cooperatives.
Its latest index found its suppliers had increased what they charged Foodstuffs by 8.3% in June 2023 when compared to June 2022.
Critics of the Foodstuffs index, such as business journalist Dita de Boni, say the index doesn't reveal what's really going on between suppliers and retailers as there are complicated calculations that need to be accounted for, including supplier payments for promotion, placement and warehousing.
Elsewhere in the world
The New Zealand data comes as the United Nations (UN) released its report showing international food prices declined again in June.
The Food and Agriculture Organisation’s (FAO) Food Price Index fell to its lowest level in more than two years with prices for sugar, vegetable oils, cereals and dairy products declining.
The index tracks monthly changes in international prices of commonly-traded commodities.
In June the index averaged 122.3 points, a fall of 1.4% from May, but showed a 23.4% fall from its March 2022 peak which was prompted by Russia’s invasion of Ukraine. Ukraine is an important grain exporter, and wheat prices hit an all-time high of US$14.30 a bushel in March 2022.
The FAO’s separate Cereal Price Index showed a 2.1% decline in June from May, with wheat prices falling 1.3% and rice prices also declining by 1.2%.
It is forecasting world cereal production will increase by 1.1% this year compared with 2022, with 2.819 billion tonnes predicted mostly due to improved wheat production.
The agency’s Vegetable Oil Price Index dropped 2.4% from May to June, driven by lower prices for palm and sunflower oil. This index is now at its lowest level since November 2020.
For another staple, sugar, the FAO found prices also fell in June by 3.2% when compared with May. The FAO said this was the first drop in sugar prices after four monthly increases in a row. This price decline was “mainly triggered” by good progress in Brazil’s sugarcane harvest and sluggish global demand, particularly from China.
New Zealand is mostly an importer of these staples and therefore feels the impact when prices rise.
A 2020 report from Manaaki Whenua - Landcare Research found New Zealand only had a diversified supply of rice.
Most of our imported wheat comes from Australia, as well as 35% of NZ's rice and almost all barley imports, while 59% of imported maize comes from Europe, and 40% from the US.
This report concluded that any disruption in one trade channel could mean NZ no longer had sufficient cereal grains to meet domestic needs, at an affordable price.
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