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.
97 Comments
Look this is admittedly off thread but does anyone else think about the prime ministership of Ardern, the fateful seeds that were sewn willy nilly, and now the weeds are shooting up, infesting and plaguing all and sundry. That prime minister has just floated away like a fairy dust, without taking one iota of responsibility. And it hasn’t yet stopped, the recent disclosure, the pathos and handwringing, that announced the end of dawn raids was another pathetic example of fine words doing nothing. What a Dame!
That's exactly what happened. It's classic Ardern. Say something incoherent, make a mess, blame someone else, and walk away. It was embarrassing while it was in progress, it is great she will no longer darken our doors, but there is a huge mess to clean up....and her supporters lost badly on the deal. More fool them...
Unlikely to be gateau though. Had been monitoring our household and some didn’t believe the 14.7% increase in household outgo this year that I posted on here. Of course that included rates, power, fuel, insurance. This figure here today is staggering and disastrous for youn and other families facing huge mortgage rate increases. The RBNZ wilfully printed money and this Labour government wilfully spent it. And here we all are now.
I suppose you mean Labour government wilfully spending it.
Core Crown expenses are still forecasted at $9b higher in 2023/24 than in the prior year, and $30b more than 2019/20. The tax revenue shortfall against forecast keeps widening each month as company tax take dips and will likely spill over into PAYE and GST soon enough.
Worrying stats released this week show half of SMEs across the country are no longer paying themselves a penny.
A bigger concern is that a lot of that spend is becoming ingrained - nurses +1.5b, which I whole heartedly agree with, is not something we can easily backtrack on. So then the real question is, how much tax and where is it coming from? For now, higher OCR and higher PAYE. But both of these are inequal and are targeted, double dipping. There are things we can and should cut back on, but I dont think we're going to get ~$15-20b covered with cuts in spending. Somebody noted here recently they reckon Hipkins will index tax brackets last minute and pull the rug out from Luxon. I could see this playing out, but only makes our deficit problem worse.
Whats interesting is that food only makes up 18.6% of the CPI basket. However poor people probably spend 30-40% of there income on food & the rest on other necessities like rent, power etc. . So you get this dynamic where inflation is higher for poorer people and relatively less for the wealthy.
Of course there's the long standing dichotomy of the likes of Arian Orr and Grant Robertson deciding "what's best for NZers" while enjoying multiple six figure incomes. Food inflation etc is immaterial to them.
I often wonder how different their decisions would be if they were only earning 80k.
Message for the urbanite who does not or can not grow their own food, remember you depend on thousands of people and hundreds of processes to not starve to death.
There is a reason the original suburbs were planned with large yards, explicitly so you could grow your own food if pressed.
In the last 2 years I've put in 4 x IBC cut in half wicking beds. Just put in 2 more raised garden beds and planning a green house for next year. I refused to pay $15.00 per kg tomatoes in New World. Bad last 12 months with all the rain. Hard to compete with commercial growing quality or efficiency. I am saving money though. I started making my own Kombucha. Now making 18 L semi continuous batches on a 10 day cycle. with about 2 hours work per batch and about $1.00 cost per L . At $10.00 per L in the supermarket that's a pretty good use of my time. Someone is making a killing on that product. Looking to make higher volume as I can only just supply my family of 6.
Good on you upquark. I've had a garden for last 15 years or so after digging a chunk of backyard up, it was an escape for me from the heinous hours and pressure of work. Nothing like being outside with the sun on your back to have all troubles melt away and have time to think. Grow peas, carrots, tomatoes, zucchini, lettuce, herbs (basil, oregano, sage, coriander, mint, chives among others), cucumbers, spring onions, masses of super hot chilli (make my own hot sauce), rhubarb and radish. Have apple tree, plum tree, grapefruit, feijoa, Tahitian and Kaffir limes and raspberries. We get so much from the garden we give it away to neighbours and friends. And yes, last summer was a turd with the rain. Though we still got more tomatoes than you could poke a stick at!
Great work, and very fulfilling. I brew 30L batches of beer from scratch at whatever percent and style i choose. Usual costs are around $30-80 for ingredients (more hops = more money), around 5hrs of time, and ready in 3-6weeks so I keep a cycle to always have a couple of options in hand. Got hops growing in the yard which I freeze on harvest as well as doing a fresh hop batch.
This is not official, but there is a team attempting live GDP and inflation readings:
https://www.gdplive.net/Dashboard#graph
They are predicting a small rise in inflation next reported quarter. They also report the Taylor-rule optimal OCR, which is currently 8.7% (3.2% higher than the actual OCR).
Yes, I think there's good reason to think some of the inflation is temporary pandemic/war related one-offs which will fall out of the data (and maybe just has in the US). Things like oil and international shipping prices have fallen pretty hard over the last year.
This tracker built by Massey isn't perfect yet its forecasts have ended up in about a 10-20bp range of actual CPI in the last few quarters -> GDP Live
Surely the numberphiles at Stats NZ will jump all over the prospects of releasing monthly CPI, however there seems to be a lack of political will to fund it.
I knew a guy who was scraping supermarket sites couple years ago, he found good deals and oddities where you could buy something 20 x as cheap and took advantage of it, they protested often but had to supply at that price.
For stats nz to do it properly theyd need API access and probably a law change as I doubt supermarket owners would be agreeable about such accurate data.
How many of the 72k net migrants in the last 12 months have helped alleviate labour shortages within our local supply chain networks vs added to the burden with more mouths to feed?
The effect of the full RUC charges being reinstated are yet to be felt on food prices.
Forget being locked out of buying houses, we now need to worry about more Kiwis being locked out of their fridges and pantries.
The second half of the article should be read carefully as there are some very good hints as why prices fall overseas but not in NZ. For example, one issue is that wholesalers don't do a lot of shopping around for the best prices. Instead they tend to be quite lazy and stick with the same suppliers, clip the ticket, and pass on the goods. That's pretty typical of wholesalers in general in NZ. It's very different overseas. Not to worry - there's a whole bunch of keen and cutthroat asians starting to operate as they see the lack of competition and margins at the wholesale level and are slowly making inroads. They'd move faster if Kiwis weren't so damn parochial.
You seem to be describing loyalty. As a wholesaler, not of food, relationships on the buying and selling side are our lifeblood. We provide service and back our products 100%, this isn't cheap to achieve.
Turn any market into a lowest price wins and no one wins. Shit produce for cheap isn't a step up.
A lot of fresh produce suppliers to the big players are direct, there are no middle men. I don't think your comment holds much water...
It was my comment, but just to clarify, I didn't suggest the OCR target should be increased. I said that, IMO, in the future, when high interest rates hurt the economy so much that many businesses close down and many employees lose their jobs, central banks are likely to stop or even reduce interest rates, despite inflation still being above target, and I wouldn't be surprised to see them increase their OCR target range.
So true…since the post pandemic inflation many families have been forced to eat more processed carbs, less vegetables, fruit and protein. Long term effects may be much worse than expected. Please remove GST from basic and healthy foodstuffs. There will be sustained benefits for NZ.
You don't know if most or any of the GST savings get passed on to the end consumer. Not enough competitive pressure in the sector preventing the supermarket duopoly to absorb some (or most) of the GST savings. The Crown ends up with a revenue shortfall that it has to fund and will likely pinch the taxpayer's pocket elsewhere.
Further, such exclusions are difficult to monitor and will cost the Crown in admin burden in the form of a large team of analysts at IRD or MBIE whose daily task will be to process volumes of applications from retailers for GST exemptions on various food items. Foodstuffs and Woolworths have the corporate machinery (and consultants) to drown agencies in bundles of paperwork.
This could be part of the reason:
What categories of Goods and Services are GST exempt?
According to the Australian Taxation Office (ATO), the following categories of goods and services are exempt from GST:
- Most basic foods, such as bread, milk, vegetables, and meat
Agreed, if you go to Pak N Save you can still shop relatively affordably by purchasing the specials only (I don't know if the layouts are the same, but the one I frequent has big bins in the middle of aisles or up the sides with discounted bulk buys, clearance lines etc).
You can get a heap of food for a reasonable cost but it's all processed shite - chips, biscuits, soft drinks, instant noodles etc.
If you want to buy meat, fruit & veg or other fresh foods it's just prohibitive for many.
As you say, the flow on will be expanding waistlines, worsening health, which in turn results in more costs.
Nice of you JJ to think that the supermarkets lay their food out for what's best for the consumer. No it's simply because fruits and veggies go bad quickly and the supermarket need to sel them quickly, so putting them in the back of the supermarket would be bad for them.
FYI, there is serious money being spend about where each food is displayed. For example milk is generally way at the back, because many shoppers do buy milk no matter what, so it makes the shopper walk through the supermarket and maybe spot something else they need to buy.
Yep, but they do have to keep the consumer in mind too, and frozen veg at the start would be stupid.
Our local Countdown seemed to have a policy of putting things in dumb places (like Tomato Sauce not in the sauces isle), I guess so you ended up going through the whole store and buying more. The end result was that we now shop at the New World down the road.
Headline on homepage: "Fruit and vegetable prices charge on with 22% annual rise"
This headline: Food prices rise again, with 12.5% annual increase in June: Stats NZ Food Price Index
My headline? What about this:
"Worst Summer Weather for A Generation Drives Up local Food Prices"
Point 1: Weather and food production have a relationship
Point 2: Buy seasonal - the index buys a fixed parcel of goods (smart people don't)
Point 3: Buy only what is cheap and healthy (smart people do)
Point 4: Learn to cook / prepare anything and everything
Point 5: Imported foods should be cheaper - why aren't they?
Why is anyone surprised by this? The current QTR will see massive inflation with the following: -
- Petrol tax going back up
- Oil on the march up
- RUC's going back up
- Most large businesses align annual pay review with FY. This means a lot of people will be getting payrises at the same time.
- Annual General Rate Increases from supplier and service providers will kick in from July.
- Council Rates are up
- Insurance rates are up
- Businesses will have budgeted for the above and guess what? They will recoup costs by putting up prices......
For argument’s sake, let's assume that Inflation is beaten. What does that tell us about that process? That it has been achieved and Unemployment hasn't zoomed up as was generally anticipated. (It never could, given our demographic changes). And that means that in the future, when the next bout of wage demands come through thick and fast, absent the fear of losing jobs, they will call for much higher wage rates. And that, is what's going to drive the next tranche of inflation - the perception that 'last time it worked' without any social cost.
Of course, that's still coming, but with what we always assumed was Full Employment to boot. And in that circumstance, today's interest rates - not even normalised by historical standards - are going to look low.
"Last year, 33,863 people migrated from New Zealand to Australia" - assumption or not, that is why unemployment here isn't going to rise as was anticipated. Vacancies are going to be numerous just to fill what jobs are in that number, never mind about the wave of retirement we have going on. And that is what will drive the next wave of wage rises; and then CPI rises, and then OCR rises. We should have achieved an OCR above the CPI by now, and haven't. Like as not, that's now going to be a catch-up task of crippling proportions.
The Recession has just started. Do you get out much?
(But yes - inflation has been beaten but we'll not see that for 6 months. We will see the job losses, mortgagee sales and empty retail stores before that. We'll also see the oldies saying, "Where the problem?", as they consume the biggest chunk of the "welfare" budget.)
"For argument’s sake, let's assume...." isn't suggesting that we won't see any of those things you write, but putting a discussion case of those that might disagree with that. Personally, I don't think Inflation is anywhere as near beaten as current stats seem to be telling us, but by the time it is, that Recession you see will much more likely be a Deflationary Depression incorporating massive asset price destruction. But it will take time to arrive. It's the one thing The System is designed to fight at all costs.
The carnivore diet is most likely healthier than the western diet dominated by refined carbs and ultra processed foods… but I reckon you can do a touch better by adding some nuts, olive oil, fresh fruit and veggies plus the odd probiotic such as kefir or kombucha to your diet. As much as I love a good steak, I think I’d get bored only eating beef!
I do miss from time to time enjoying some junk food. Carnivore diet is so effective at making one fill full making it more a case of boredom than hunger. I do consume cream, butter, coconut oil, sardines, eggs, pork, lamb and chicken. I guess what I am trying to communicate is that people don't really need to buy expensive foods.
Concentrate on nutrient density. Fruits are too high in sugars and low in nutrients these days that they should be considered treats. Don't waste your money! Massive doses of vitamin C are only required if you are digesting large amounts of sugars, hence why they are found together. The nutrition value of vegetables is minimal yet they contain chemical toxins that damage human health and inhibit the take up of nutrients in other foods. Fibre is not a necessary part of the human diet as humans lack the necessary digestive system to process them and they cause digestive issues rather than ease them.
One can save a lot of money and time if the diet is mostly meat. The nutrients and energy per dollar is more effective and likely cheaper, especially when you factor in the costs of diabetes, obesity, mental disorders, arthritis, cardiovascular disease, cancer and dementia.
That said the healthy body is likely fine with a high animal product diet plus some fruits and vegetables. I'd go easy on the nuts though.
Looks like we are going to need tent cities or bunk beds to fit into all the rentals https://www.kpbs.org/podcasts/kpbs-midday-edition/san-diego-mayor-on-la…
Made a blade steak casserole yesterday
1kg blade steak
500ml beef stock
2 carrots
browned onion
one leak
250ml red aussie cheap sav - rest of bot with meal
a few mushrooms
brown meat and onions, add to dish and cook at 165-170 for 3 hours, serve with mashed spuds.
feeds 4 easy, you may need more wine - for drinking not casserole
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