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.
84 Comments
HM, the Kirk/Rowling government tried that with the ill fated MRPs & Muldoon again just as futile, with price freezes. Intervention is as negative as subsidies, as all that is achieved is more distortion. Don’t think any New Zealand common household shopper will be at all surprised by these figures. This is homegrown inflation, like it or lump it, and it is now embedded. Sure there might be some indication of inflation beginning to ease in some nations overseas, but here in New Zealand? Don’t think so.
Maybe some form of price controls need to be seriously considered, with the caveat that there might be unintended consequences…
Quote:
Which gets us right back to the first reason Japan is not afraid of inflation: government intervention and de-facto price controls.
When you analyze Japan`s consumer price index, you`ll quick find that just about one-quarter of the goods and services for which Japanese consumers pay are subject to government rules and regulation, i.e. de-facto price controls.
Health care services and pharma are an obvious important example, as is education, much of transportation, as well as several staple foods. For food, the Japan Agriculture Cooperative, JA or 農協, plays a key part in expertly balancing fiscal support for producers while preserving the peoples` purchasing power.
https://japanoptimist.substack.com/p/whos-afraid-of-inflation-not-japan…
I'm an Estimator for a manufacturer in civil infrastructure. Product involves raw material imported in $USD. Maybe our pricing strategy is a little different than other segments of the economy. While cost inputs such as exchange rate and raw material costs set a price floor, there is no price ceiling, and we too "gouge" when we can.
I'm not suggesting that farmers price gouging is a bad thing, but merely that's probably what's happening. As well as recovery of loss time while they take time off to protest.
Generally in farming, the seasonality of weather affects the cost and volume of production. The quality of the season affects yields for an entire industry, which goes some way in setting a price for produce (the price usually isn't set by the farmer). And each farm will have varying fortunes within that, in a bad season, some may have a greatly reduced yield and lose money that season, while others may profit from a better than expected personal harvest paying out a higher rate in an overall poor season. Conversely, in a fantastic season, there will be too big a harvest, with lower rates paid per tonne, or some produce not being sold at all.
And then outside of that, most of the common agricultural input costs have done nothing but rise for the last couple of seasons.
The ability to just say "I'll charge 15% more thanks" isn't really there for most farmers, most have supplier contracts that outlay pricing structure. By far and away the largest influence of the high food prices we are seeing is because they simply cost more to produce.
Source: I grow a modest amount of fruit commercially.
Yes I understand the basic fundamentals and no I don't truly believe farmers are gouging. My comment was a tongue in cheek response at GBH's claim that just one man, Robbo, is responsible for inflation. I hoped he would provide some examples, but everyone else is talking about the weather and global grain prices.
https://www.nzherald.co.nz/bay-of-plenty-times/news/farmers-brace-as-co…
Farmers brace as costs spiral, one fertiliser up 125 per cent, feed an extra $30,000 a year
''The hurt is coming.''
That's how one farming leader's prediction as the sector is hit by escalating costs that have eroded bottom lines while another says ''we are running to standstill''.
One fertiliser had skyrocketed to $1800 a tonne compared to $799 a tonne two years ago while freight, labour, feed, farm supplies, freight, regulatory requirements, equipment and machinery had all increased.
The dairy industry, alongside beef and lamb, had posted solid results in the last year with the farmgate forecast sitting at about $9 per kgMS but this was being offset by spiralling costs.
Federated Farmers Bay of Plenty provincial president Darryl Jensen said issues in the supply chain were frustrating and the price of fertiliser was ''horrendous''.
Put Premium at the top of your agenda
"Europe is scrambling to buy diesel fuel from Russia before a ban on imports comes into force in early February, but the frantic stockpiling is unlikely to prevent a new price shock for truckers, drivers and businesses." https://edition.cnn.com/2023/01/17/energy/russia-diesel-ban-prices/index.html
Up till now NZ on its own bat and i doubt anywhere else in the world, placed a 35% duty on goods imported from Russia.
This includes fertiliser which the USA and other countries have exempted.
Thanks Labour for contributing to food inflation. We realise this is part of NZs contribution to the Ukraine war effort.
It depends on the temperature you bake the milk at:
https://www.youtube.com/watch?v=vyyyh8_Afyw&ab_channel=fizz112
The last time we had significant inflation (1971 onwards) it took a generation (almost 20 years) to bring it back under control ( New Zealand Inflation Rate 1960-2023 | MacroTrends ). The era of crazily ultra-cheap money is gone.
'Fresh' talent coming through the ranks of National:
National leader Christopher Luxon has promoted former leaders Judith Collins and Todd Muller in his first National reshuffle of the year.
Collins, who was sitting at 19, near the bottom of the shadow Cabinet ranks before, has soared to number 10 on the list, and Muller, who was unranked, now sits at number 12.
Chris Bishop picks up urban development and RMA Reform portfolio. However, he has lost the shadow leader of the House portfolio to Michael Woodhouse, who held it when Collins was leader.
Perhaps, perhaps not. There is still much repair work needed to overcome the terrible state of affairs the party was in leading up to the last election that began with the Ross upheaval and got steadily worse. Incredibly the opportunity to evidence such improvement was squandered at the Tauranga by election, which if anything, verged on more of the same. The subsequent Hamilton selection & performance though, was encouraging. Luxon & his inner team will need to maintain much discipline in its ranks and prevent any repeat of the bad episodes that have quite effectively hobbled them in last four years or so. On the other hand there is direction both opportune and ironic on hand. Labour look decidedly like a house divided, not as bad certainly at this stage, but nonetheless a lot like National were pre the last election.
ps. A house divided now seen to be a vast understatement. The PM has taken Harry Truman’s advice and exited the kitchen stage left.
New Zealand's very own Biden in the making.
But he got his parties momentarily mixed up, transposing his own party for Labour when he told the audience - "I joined the Labour Party" - before quickly recovering to a round of applause.
https://www.stuff.co.nz/waikato-times/news/300034341/opposition-leader-…
6x increase in freight cost means that the supplier of Chinese canned goods for Homebrand at NZ supermarket chain has to increase the price when his supply contract is renewed. So instead of 50c a can they need to charge 70c to make the same pitiful margin. But the oligarchs still want there usual 30-40% margin on top of that. So retail goes from 70c to $1.
A 40% increase for the consumer !!
Also thanks egg farmers - many of you ignored the change to cage-free chickens and are now scrambling to comply. Government only gave you warning 10 years ago.
This small example is perhaps indicative of many NZ businesses’ approach to managing market risks & regulations - put head in sand until the last minute and then increase prices, or complain about “sudden shocks”.
https://www.stuff.co.nz/national/130886982/controversy-over-lack-of-egg…
Those who stayed began transitioning away from battery cages promptly but many were delayed by the Resource Management Act (RMA).
Brooks agrees. He knew of one company that was held up for three-and-a-half years because of the act.
That same company was to face an even bigger blow after spending $60 million dollars converting from battery cages to colony cages (a home with enrichment areas with a capacity of 60 hens), only to be told in 2019 the supermarkets would only take free-range or barn raised eggs from 2025 to 2027.
Colony cages are almost as bad as regular battery cages. The minimum (so I expect default) floor space per chicken in a colony cage is the size of an A4 piece of paper. The government should not have suggested they were a good thing to transition to from the beginning. I expect they wanted some good sounding news - "We are getting rid of battery hen cages! (*in ten years) (*to something almost as bad)".
One certainty i forsee before the end of the year is that a loaf of bread will be $5 in NZ
I hate forecasting or being a fortune teller but looking at the news around the world and climate changes causing impact on food generation, this is going to happen.
And that will have a huge impact on how we live our lives. Crime is all connected to how well fed is a society.
Rest the readers here are smart enough to join the dots.
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