Food prices rose almost 2% in January, according to the latest Statistics New Zealand Selected Price Indexes (SPI), the largest monthly increase in almost three years.
Stats NZ's January SPI says food prices have risen 2.3% in the past 12 months and 1.9% on a monthly basis.
Stats NZ’s SPI features goods comprising about 45% of the quarterly Consumers Price Index (CPI), the official measure of inflation tracked by the Reserve Bank. This means the monthly SPI provides a good idea of where the path of inflation is going.
January’s SPI is a massive increase from the month of December when food prices edged up just 0.1%, and it’s the largest monthly rise in the cost of food since a 2.1% increase in July 2022.
Stats NZ said 65% of items priced in the food basket were more expensive in January 2025, compared with an average of 54% per month in 2024.
“The proportion of the food basket that increased by over 5% in price was the highest in five years,” Stats NZ’s prices and deflators spokesperson Nicola Growden said.
“About 20% of the basket saw prices rise 5% or more in January.”
As of the December quarter, actual inflation as measured by the CPI was still running at an annual rate of 2.2%, having not budged from the 2.2% rate it was sitting at in the September quarter. That's smack bang within the Reserve Bank's targeted inflation range of 1% to 3%, and is the first time it has been this low since mid-2021.
ASB senior economist Mark Smith said it was still early days, but the SPI figures suggested that the lower NZ dollar was reigniting pricing pressures “from a number of pockets”.
“We continue to expect a moderate firming in annual food price inflation over 2025, given recent improvements on global food commodity prices and the low NZD,” he said.
Prices of groceries, milk & chocolate rise
January’s rapid food price increase was driven by higher prices for grocery food, especially increased pricing from milk, boxed chocolates and chocolate blocks.
Grocery food prices were up 3% on a monthly basis and 4% higher on an annual basis.
The average price of a 250g block of chocolate was $5.72 in January 2025 compared with $4.90 a year earlier in January 2024, according to Stats NZ.
Westpac senior economist Satish Ranchhod said chocolate prices typically spiked ahead of Valentine’s Day but this was the biggest increase the bank had seen over the past 25 years – up 13% in January’s SPI — and likely reflected the rise in global cocoa prices.
Growden said the average price of a two-litre bottle of milk was $4.54 in January 2025 compared with $3.93 in January last year.
Higher prices for fruit and vegetables – up 2.8% — also contributed to the 2.1% increase in food prices during the month of January.
Growden added that fruit and vegetable prices typically increase in January months.
“Out-of-season produce, such as broccoli, kiwifruit, and apples, contributed the most to the price increase in January,” she said.
Rentals make up 9.5% of the CPI and Stats NZ said the ‘stock’ measure of rentals was up 0.1% in January compared to December 2024 and up a higher 3.6% on an annual basis.
Stats NZ’s ‘flow’ measure of rentals (which is applicable to new tenancies) was not included in the agency’s SPI data for January due to Stats NZ continuing to work through a new data system for these measures.
Westpac's Ranchhod said rental inflation was much weaker than expected and the bank had only seen a rental increase as small as January’s twice over the past decade.
“Anecdotes point to much more muted pressure on rents this year as population growth has slowed and the stock of houses has increased. Rents are one of the largest components of domestic inflation,” he said.
Stats NZ found petrol prices rose 4% on a monthly basis and had edged up 1.2% compared to a year ago. While diesel prices rose 5.8% compared to December 2024, diesel fell 4.3% on an annual basis.
In January 2025, domestic air transport prices fell 1.3% while international air transport prices slumped further and were down 11.7%. Annually, domestic air transport prices were up 15.5% and international air prices edged up just 0.9%.
Alcoholic beverages and tobacco prices also drove up January’s SPI, with prices 2.4% higher in January 2025 compared to December 2024 and 4% higher annually.
Growden said the new tobacco excise tax that took effect at the beginning of 2025 had increased tobacco prices.
ANZ economists said in a research note on Friday that the lift in tobacco prices was larger than expected and also larger than the annual indexation of excise tax would suggest.
49 Comments
We don’t need Javier Melie, we need a Franklin D Roosevelt. Power is the ability to get other humans to do what you want. Capitalism is a beautiful solution to this by making a system of supply and demand through price discovery.
Dollars do not change people’s quality of life. Your needs, wants, and delights come from other people in exchange for you fulfilling others needs, wants, and delights. Money is nothing more than a vote for what people do.
Wealth inequality is when just a few people have far more votes than everyone else. That means they are getting more of your time and giving you less.
The rage that the average person has is simmering because of this. You might not think of it in this way, but people aren’t dumb, they can feel that they’re being fucked over because they are.
FDR solved this non-violently after the Great Depression, but it is unknown if he could have kept things from reverting back to the robber barons favour without World War 2.
We need someone who understands that the true problem is that people are working longer only to get less in return. That’s not a fair deal.
SKF
Wealth inequality is at similar levels to the late 1920’s just before the Great Depression. And we’ve also just had a yield curve inversion that was similar in depth and duration as to just before the 1929 sharemarket crash and Great Depression.
If I were a truely doom and good person I’d say ‘it’s going to happen again’ but I’m not so sure of that. But I certainly wouldn’t be saying the next 10 years are going to boom like the last few decades.
Some how we need to create the possibility of prosperity for all (ie hope and a willingness to work hard) and not just those who already have a lot of capital or who have parents with a lot of capital (who don’t necessarily work hard, they just let their wealth create more wealth for themselves - using the labour of others)
Glad to see that you are willing to call a spade a spade Zwifter
I still think we'll see 25bps, perhaps 50 next week but I think that is where it ends.
The rates more or less already reflect that so anybody expecting 0.5% cuts in actual interest rates after the OCR is going to be deeply disappointed.
If he holds it would signal the low.... I do not think he can afford that here, so minimum a 25, but he will look through all this, the OCR is still restrictive even after 50.... he has no choice but to cut 50,
Importantly its an MPS so he will also have to update their full view looking forward.
They are going to signal that the economy is in shit shape.... but that global events prevent a clear view going forward so they must watch data closely, HE CANNOT afford to signal a hard stop here IMHO even though the chances are increasing that this is the bottom... he must be praying that the us economy turns to poop and FED can cut.
I do not see that happening until q4 25 earliest.
‘Is this the worst "Fed pivot" in history?
Since the Fed "pivoted," CPI has RISEN to a 7-month high and PPI just hit its highest since Feb 2023.
In fact, rates paid by Americans are UP +100 bps since cuts began’
https://x.com/kobeissiletter/status/1890041308590612891?s=46&t=MUwQeKa7…
Because these numbers are already out there my expectation is that the value of the NZD will drop off further if he cuts 50 bps next week. And.. it is not only food prices somebody reported about increase in pricing of sheet metal and other building/construction products. We might see below USD 0.50 before the end of this year.
I think he should hold, but I think he will probably make a cut.
So there is a difference between what I think is right and what will probably happen.
We seem to drop too low for too long and then too high for too long - so I’m more in favour of moderation to this approach - and for me, big cuts is just more of the big flip flop without any real stability for the economy. If he keeps cutting he may induce another round of people loading up with private debt which the economy cannot support and create more of the problem that we need to resolve, not amplify. Holding prevents that (in conjunction with DTIs) so that we can get our private debt to GDP back down to more financially stable and sustainable levels - it’s been 140-160% of GDP since 2008 but only possible by always dropping interest rates. It’s not smart financial policy. We need to do something other than buy and sell houses to one another.
people here are either desperate for low rates or desperate for high rates. a lot of commenters today desperate for the latter.
Personally i wasn't expecting them to be this low yet so any additional cuts is a bonus! :D
I have a few week left till i can lock so will see what extra deals might arise.
But but but... what about NZ's most beloved prized and only asset/investment class. The ponzi needs a shot in the arm ASAP and there's only one way this can happen. Lower, right?
The boomers, the banks and our politicians all need this for their balance sheets. What a pickle they have created
But but but... what about NZ's most beloved prized and only asset/investment class. The ponzi needs a shot in the arm ASAP and there's only one way this can happen. Lower, right?
The boomers, the banks and our politicians all need this for their balance sheets. What a pickle they have created
Yes indeed. I have long pointed out that Ponzinomics and preservation of the Ponzi itself requires tradeoffs and has consequences. We're possibly now at the pointy end of the stick in terms of those tradeoffs and consequences.
Preserving the Ponzi means that you have to suppress the price of money - and that means cutting the cost of credit. And that leads to other tradeoffs - trashing the purchasing power of the currency.
It is what it is.
Have been warning on here for about 10 years that our economic policies and group think culture (be quick, get as much housing debt as you can, buy a rental to ‘get ahead’) was leading NZ towards the rocks. We can’t just buy and sell houses to one another and live off the wealth effects of rising capital values - eventually you actually have to produce real goods and services if you wish to have real prosperity.
People should have understood this a long time ago. Mind you I still think the ruling elite believe you can build prosperity through credit creation for non-productive purposes. But I think I understand the method to their madness. They believe that high land prices underpin financial stability and have become something of a capital base.
Too much focus has been given to house prices, and not enough to the costs of owning a house.
People are fleeing to Australia now not just because housing is cheaper to buy, but because they are cheaper to run as NZ faces exorbitant rates increases, insurance premium increases, electricity increases .... This idea that "inflation" is a mere 2% when these costs are going up double digits every single year is just a joke. Who cares what the price of overseas hotels or airline tickets are, when your holiday savings have just been eaten by your council rates increase?
My rates will be over $10k next year. On the Gold Coast, a property of the same value would be $2k.
https://businessdesk.co.nz/article/economy/the-turbo-charging-of-rates-…
Why have your rates gone up, because everything the council can do with that money it collects has gone up...(Plus the backlog of maintenance that was put on hold in the last 30 years).
You should have been complaining a long time ago that you were not paying enough,... debasement is ugly when it slaps you in the face.
Pretty myopic view, who do you think pays for the transport network, that sucks up a huge chunk of taxes. Never used the health system? Never voted in elections, never been to a DOC reserve? Don't need police or military? Never benefitted from the justice system? The rule of law? Clean air?
Some standard Christchurch rates info, $1 million house $4.7k, $2 million $9k. Move to a cheaper house, pay up or cut a track to the Lucky Country?
https://ccc.govt.nz/services/rates-and-valuations/setting-rates-and-valuations/this-years-rates
Just imagine what high income earners could do if they weren't paying exorbitant amounts of tax, whilst asset rich buggers do all they can to avoid it.
We'd have happily taken an 8k reduction on income taxes, along with a 10k reduction on uneven household taxes...
Imagine, if you can, your landlord is on an interest-only mortgage. You are a PAYE household.
Your median rent takes half your median household after-tax income. Half the income you paid tax on goes to the landlord. Half your tax paid was for their revenue.
They pay no tax on the revenue, but use it to pay their respective bills. PAYE tenants are subsidizing their landlords tax.
If Residential mortgage interest can be tax deductible, then so should residential rents.
$4k. In your dreams. Nearby townhouse for sale for $969k has rates of $6,012. Another townhouse (one of those 2 bedroom crappy ones in a block of 7) on my street valued around $700k has rates of $4021. Exactly where am I supposed to move to? Aranui?
Or I can move to the Gold Coast and save myself $8k a year. That buys a couple of really nice overseas holidays each year.
Today I found out that there are no dump fees for taking stuff to a Gold Coast dump. You can also order a skip to be delivered to your home once a year, which will be collected for free. Melbourne had free hard rubbish days. In NZ we dont even get the basic Council services delivered in Australia which makes it even more aggravating.
Yes and no. I don't see it dropping any further but for anyone now rolling off 7% and dropping to 5.49% or less its great news. Orr simply will not make the mistake of crashing rates again. I believe we are already at below the long term average rate and hence I pretty much see a hold now until the world stabilises.
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