High international commodity prices will continue to underpin high domestic prices for bread and dairy products over coming months, ASB economist Chistina Leung says.
The effect of the recent floods in Australia on fruit and vegetable crops would also likely be a factor in keeping prices high, Leung said.
Overall food prices rose 1.8% in January from December due to traditional rises in fruit and vegetable prices over the month, according to figures realeased today by Statistics New Zealand. Vegetable prices were above levels usually recorded for this time of year, Stats NZ said.
The 1.8% rise was slightly higher than ASB's expectation, Leung said.
"As expected, strength in fruit and vegetable prices (which rose 7.4%) led the increase. This reflected both the fact that it is a seasonally strong month for fruit and vegetable prices, and weather conditions which affected crop yields," she said.
"Higher international wheat and dairy prices show signs of flowing through to higher grocery prices which increased 0.9% in January. We expect the strength in international commodity prices will continue to underpin higher prices for bread and dairy products at the retail level over the coming months.
"The effects of higher international commodity prices were also reflected in a 1.7% increase in meat prices in January. International lamb prices have increased 35% and beef prices 31% in NZD terms over the past year.
"Meanwhile, the price of restaurant and takeaways again edged higher, increasing 0.4% in January. Part of this is likely to reflect the recent recovery in wage inflation, given the dominance of labour as an input cost in this category," Leung said.
"We expect continued strength in food prices over the coming months, underpinned by higher international commodity prices and the effects of recent floods in Australia on fruit and vegetable crops," she said.
Food prices were up 3.8% in January from the same time a year ago, Stats NZ said. In October 2010, GST was raised from 12.5% to 15%, meaning general prices rose by around 2.2% because of the hike. The annual rise was down from 4.2% in December 2010 from December 2009.
While January's annual growth was well below the double-digit growth seen over late 2008, food prices would still be a key factor to watch over 2011, Leung said.
See the release from Stats NZ below:
Food prices rose 1.8 percent in the January 2011 month, Statistics New Zealand said today. This follows price falls of 0.8 percent in December and 0.6 percent in November 2010. All five subgroups made upward contributions to the January 2011 increase.
“Food prices usually rise in January. A seasonal increase in fruit and vegetable prices accounted for half of the 1.8 percent increase in food prices in January this year,” Statistics New Zealand prices manager Chris Pike said.
The fruit and vegetables subgroup was the key contributor to higher food prices in January 2011, increasing 7.4 percent. Fruit prices usually peak in January, and prices rose 7.7 percent in January 2011 with seasonal increases for strawberries, mandarins, kiwifruit, and apples.
Vegetable prices – which are above levels usually recorded at this time of year – rose 7.2 percent in January 2011 with higher prices for lettuce and potatoes. Lettuce prices were almost double those recorded a year earlier.
Grocery food prices rose 0.9 percent in January 2011, with higher prices for chocolate (up 5.2 percent) and yoghurt (up 3.7 percent). Meat, poultry, and fish prices rose 1.7 percent in January 2011, influenced by price rises for fresh chicken (up 9.3 percent).
In the year to January 2011, food prices rose 3.8 percent, including a 2.2 percent increase in October, when goods and services tax (GST) rose.
All subgroups made upward contributions. The most significant contributors were grocery food (up 3.9 percent) and fruit and vegetables (up 8.1 percent), with higher prices for milk, cheese, and eggs (up 8.9 percent) and vegetables (up 10.2 percent).
(Updates include ASB economist comment, new head paras)
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39 Comments
Combine this with power,petrol,rates and insurance and some still wonder why housing and retailing is struggling. Everything you do or buy or use is going up in cost but the incomes of a lot of new zealanders are not going up in tandem. Growth in basis costs of living is a world wide problem. Not a good time to be supporting a big loan on the old home or the rental portfolio.
Hi all, just got this release from Stats NZ on its retail trade survey:
Monthly retail trade survey moves to quarterly
Statistics New Zealand will no longer be releasing monthly retail trade data. The current monthly Retail Trade Survey (RTS) release will become a quarterly survey of retail sales and stocks, collecting sales for the quarter rather than every month.
By making this change, Statistics NZ:
rationalises the production of two similar monthly indicators of consumption expenditure – retail trade and electronic card transactions
reduces monthly business survey data collection, which lessens the load on respondents
continues to provide a range of short-term economic indicators.
Quarterly retail trade statistics, including regional and industrial breakdowns, will still be published – to meet the need for detailed information.
The December 2010 quarter RTS release on 14 February 2011 will be the last release of monthly information.
Monthly RTS statistics are mainly used by analysts and commentators as an early indicator of changes in consumption expenditure. Statistical analysis indicates that movements in the monthly Electronic Card Transactions(ECT) series are a reasonable substitute for the monthly retail figures in indicating changes in household consumption expenditure.
The monthly ECT series will continue to be produced, providing an early indicator of change in consumption expenditure.
ECT is a monthly census of electronic card transactions processed in New Zealand. It includes all debit, credit, and charge card transactions with New Zealand-based merchants and includes goods and services tax.
The first release of the new quarterly Retail Trade Survey will be on 13 May 2011.
So if costs go up and wages don't, there is less purchasing power. We consume less. This is just noise around the perifery of a pile of stinking unservicable debt. All the central banks are loath to increase interest rates they would rather let the people suffer because they know the big and inevitable outcome is going to be a deflationary spiral. The debt has to be got rid of and the interest is killing us. The disposable income is too low to maintain the debt, the banks will be in trouble as this unwinds.( the banks are broke, walking dead men) The baltic index tells the story, falling trade( back %20). Saudi oil exports down %16, this unwinding will expose many central banks, economists and politicians as the fools they always were, compounding growth always ends and this has to end, its just the timing, doesn't matter whether its oil consumption or population growth.
I buy the groceries, Im buying eggs of a farmer $4 a doz, spinach of a local $1 a bag. Kill my own meat, get my milk of a cow down the road. We eat well at half the price, if I stay out of the super market. Farmer down the road has sweet corn, 5 for a $1, squash grower told me to help my self to any mishapen ones. Went diving with the children 15 paua. I grow peas and get $550 a tonne from hienz thats a 55c a kg. what i cannot escape is the Electricity bill and rates but their turn will come. Without wage inflation this little blip will be just that. With wage inflation our unemployment knows no end. The government is borrowing to try and maintain a ponzi scheme, injecting liquidity into the economy because less people are borrowing.
Andrewj, any possibility to set up home hydro on your property?
We're seriously considering it - once I calculate our returns for the excess projections back into the grid I'll let you know. We're also investigating wind.
Presently the powercos only pay you wholesale prices for that you put back in, but I only see those increasing overtime. And we think it's a good hedge against the rural land price deflation. Rock on electric vehicles - only way I can see us in future being able to afford the 12km commute to work and the city.
And on the petrol price matter - Bernard, what would be really cool would be a calculator that allowed folks to put in their work commute distance, the capacity of their vehicle engine, and their weekly take home pay - and then the calculator provides a % of take home pay going to petrol expenses breakdown at petrol per litre in dollar increments. I think it would really help workers prepare early for what's coming - as they can sell the big car, move closer to work, or look for alternate employment in anticipation of petrol price rises.
Kate, we are blessed with Hydro and geo-thermal, I wouldn't panic about Electricity, yet. Civil unrest stealing etc, yes I would worry about, security could be a big one. You must have a great site for a windmill but high maintanance. I do have hydo possibilities but would be expensive as the fall is gradual and thats a lot of pipe. Ive afriend with a still and he thinks he can run his car on a %80al- 20petrol mix. We will find out soon enough( he has an expensive car). Im looking at a german boiler for heating as with the low energy light bulbs and the LED etc, its hot water thats going too use the power. Encouraging family to travel and see each other while they can. Biking 12 km is easy, scooters use nothing. Id rather have the tools to adapt, than try and think too far ahead, short term I think its going to be getting rid of this debt and sorting out how to maintain entitlements that are 'off balance sheet'. Energy is a nusiance but we can adapt, Nz has a surplus of food, we can redistribute it, and reduce costs by eliminating monopoly supermarkets, no antibiotics is serious. Massive inequility worries me. I dont consider myself rich but I have no debt and and 300 acres debt free so in the future I could be seen as rich, especialy if the lights are always on and the steam rises from the hot shower.
My daughter has a young Indian friend, she earns more stacking boxs in Pac and save at 18 than her father earns as a senior accountant in Delhi. Oh yeah, there is trouble coming.
Our own electricity use is very low - especially in winter as we have a wetback (and 50 acres of pines :-).
Being sort of "accidental lifestylers" (we bought the property for the view) - like our decision to lease our grazing paddocks - what we're interested in initially is low risk, regular fixed income from the property. Or put simply, a way not to make a loss! :-)
This area is a great place to live rural - our rates went down by more than 2/3rds in moving from 800m2 in town to 36 hectares only 14kms from the city centre.
Andrewj, have a friend who had a flock in a road paddock - next morning he was 6 sheep less. This was on a State Hiway, about 5kms out of a provincial city. He hasn't had that sort of problem before.
Just curious - Why a german boiler and not a NZ product such as a Marshall heater, pot belly etc? What does the boiler run on?
Interesting you mention family travel- we feel a bit the same way and have a trip planned for later this year to catch up with them all as we think it could be our last for a wee while. At the other end of the spectrum, No 2 son is having ski fields around the world seeking his services as a snowmaker/groomer. I thought there was a recession on! :-)
You were going to speak to family/friends in the UK after your chat with your Chile mate. Do they see things the same way as your Chilean friend?
CO, friends in the UK are nervious about where the UK is heading, but they are rich and should be nervous even though they are not bankers. I think they are concerned about the ethnic mix ,overpopulation,inequality , the debt and worry about civil unrest. Europe has been home to a lot of strife over the last 100 years, has much really changed? They find that all the council costs and restrictions are a worry and impact on their freedom.
I looked at a Germanheater one but I agree probably better with a Marshall I didnt know they were still making them. Here is the German one. Its not cheap
http://www.trademe.co.nz/Building-renovation/Heating-cooling/Heating-sy…
Ive seen cast ones in Chile cheap. A whole stove with wet back like a Stanley or Aga was about a $1000 but then the paper work begins when it hits NZ.
We got one from Masport last year Andrew. Not quite this model http://www.masportheating.co.nz/catalog/maw2048 (which is 21kW output) but the one above (can't find it on the website, might have been replaced with another model, also rural 2ha+, 24kW, wetback). They are made in NZ and it cost us about $5200 (that included a 5-room heat transfer kit and double-water booster). Really happy with it, been using it throughout winter and actually had to run baths to avoid the water in the HWC boiling over on some cold days!
Re-growing one's own veggies, that's great and that's something we're going to do a lot more (only moved in a year ago, not much time to put in a big veggie garden the first year). But it does take time and money to do so. Same with fruit trees, spent quite a lot on them and the other bits needed. So I'm not sure of the actual savings (especially taking into account the time that could have been spent working on a high hourly rate instead).
Milking cow, seeing that I buy 30l of milk a week we really should get one but I can't see myself getting up at 5am to milk a cow when it's hard enough to get 4 kids ready and get to school/preschool on time by 9am... Not sure I could keep that up + work + looking after kids + still having a life. I'd probably fall in bed at 8pm! At least we have the eggs (and again, that's not free. Chooks eat all our leftovers but still need grains, not to mention time spent cleaning up their mess in the chook house). It seems there's no such thing as a free lunch...
It seems there's no such thing as a free lunch...
No Elley there isn't. In returning to a 'Good Life' type of existence it forces us to slow down and evaluate what the really important things are to us. There is often a romantic notion about 'living off the land' but it can be hard work as you said.
My daughter likes to use the 'free meat, vegies and some fruit, from dad' argument as to why they should relocate with their children from the UK! ;-)
Keep in touch with me re wood burners. I just filed for patent yesterday for a modifiaction to increase the efficiency of wood burners. Simple insert retailing around the $200 mark that I will fit most older wood burners and bring them up current standards. Basis of the technology is wood gasification as in some high end boilers. Beauty of it is that heat can be taken from the flue without affecting efficiency. Will also burn damp wood:) Yunca used to make a flue insert for water heating. Not sure if they still do.
Hi Elley,
Thanks for the info, we need a new fire this year and its zero clearance which is perfect. I have a daughter starting Uni in Christchurch this year. She's having a go at engineering. Im bringing her down on Monday. If you need a baby sitter she is great with young children , we tried to talk her into teaching but she loves the sciences more. I will hang around the south island for the rest of the week.
Thanks for the baby sitting offer. It's funny, my dad also tried to talk me out of engineering (said it wasn't a "career suitable for a woman") and mum wanted me to go into teaching. It was all about me being able to spend time with my future family but it worked out all right in the end. Like my friend put it the other day, I have my fingers in many pies these days - software engineering, freelance technical translator, cookbook author/food writer & mum of 4.3 children. Keeps me busy and interested :)
Our Masport fire is zero clearance too.
In any case, feel free to drop by with her for a drink on Monday if you have time. I'm meeting a customer on Monday morning but we'll be home in the afternoon. We're in Oxford though, a little drive out of Chch. If you have time, just drop me an email christelle@christelle-leru.com.
Thanks Elley, I stopping on the way so wont get to Christchurch till Tuesday. Ive also got a good friend coming at the end of March. She's an engineer with apple, based in San Jose, specialising in plastics she has a phd. If you want to catch up with her let us know.
Andrew
No, Elley, there ain't. We've all gotten used to eating fossil fuel, in reality. Take it away, and you spend more time manual-labouring, that's for sure.
Our approach is to down-size and up-efficiency, and throw lateral-thinking and recycling at it.
We've just done a food dehydrator out of a recycled bath, currently buildind a mirror-stainless-steel solar cooker, a solar water heater, we run the house of the home-grown pelton wheel, Home-built LED lights and fridge. There's recumbent bIKes all over the place - one's got a drive mechanism delivering power over 230 degrees of pedal rotation, with an almost-instant rise to full leverage, a flat-line across the top of the graph, then the right-hand end of a sine wave to finish. (A normal pedal gives a 180 degree sine wave).
Wonder if anyone here can work out how we do that, from first principles?
Floor-less chook pens which wheel around your fruit-trees, don't need mucked out, and the trees love it....
RE: Civil Unrest
I was reading through some recent Police Association Magazines online last week. Anectodal evidence from one Senior Sergeant is that due to compliance administration frontline officers are half as productive as they were in the 80's/90's.
Don't rely on their help when you need it.
Have some friends in Environment Waikato catchment. They had had a water wheel in a very small stream running a pump for years and years. One day the EW chappie saw it and so their nightmare began....
Find out from Horizons what you need, can do, before you spend too much time looking in to it. You may be surprised at the time and cost, a consent process (assuming they will let you do it in the first place) may take - especially if it has to be notified.
Kate, look into a device called a Jack Rabbit submersible hydro generator if you do decide on microhydro
These guys I have dealt with in the US and are excellent value:
Cheers for the link - will have a look!
One that we've previously had recommended is this;
Kate - with respect -
Most folk make the mistake of worrying about commuting to work in an enrergy-starved world, and only think of the transport to get there.
The constraint will impact everything, including redefining work. Completely.
And see my next article, re electric cars...... they're just an extension of the dream that we can all somehow carry on BAU.
Won't happen. The grid is at capacity at times now - where are the extra KW's coming from, and which transmission infrastructure are they going to come along, put up by trucks burning what?
It's all too late for that. When the supply is full-flow just to maintain status quo, there's nothing left for a heave that big, and nothing left for growth. And it gets smaller from there with time.
Google: Campbell 2004 scenario, and spend a good 10 minutes thinking about that graph. Even if he's out by 10 years (he isn't) and out on the right-hand slope by half (he isn't) it doesn't give you the wriggle-room to morph infrastructure.
Pity we didn't make physics a mandatory part of economics.
Grid-tied: Big cost in that, and makes you think in outside-assistance terms. Our pelton-wheel is producing 6 amps now - twice what it was when we first spun it - and I reckon there's more to come. We only use the generator for induction-motor tools now, and we're gradually repacing them.
Interesting points - but we all have to make best guesses as to what the near future (i.e.our lifetime) holds and plan accordingly. A nephew of mine did his Masters thesis in EE on developing a methodology for capacity planning of upgrade of the national grid network to accomodate electric vehicle use there. The largest EE consulting firm who does that work for the US suppliers hired him specifically with a continuance of that work in mind.
No idea what's happening here in that regard - but to think mains charged passenger/vehicle transport won't be a part of our future makes no sense to me. I'm hoping it will be and saying that does not imply I think BAU will continue as we know it today. We all know resource depletion leads to alternatives being taken up. That those alternatives will not produce the equivalent energy output of oil is also an accepted reality. But, life will go on, people will work, people will socialise, children will be born etc etc - albeit our lifestyles will significantly change.
We're already on-grid and I'm thinking about this property beyond self-sufficiency - I want income - hence the interest in feeding back-in. We have plenty of sun, wind, water and wood on this property - and I'd like to make the best use of all those assets! :-)
Thanks for the link - this is a great site for information!!! Most appreciated.
Yes we have wind!!!! We're just below one of the commercial windfarms in the Manawatu! As I say, we bought for the view - and lucky for us given we're tucked in just below them we don't get any of the noise - nor can we see any turbines, aside from when we're on one of our top paddocks, we see two.
I do plan to compare which is better value for money for us.
Well written AndrewJ,
However the government statisticians spin it; taking this out of the basket and replacing it with a cheaper that, the whole CPI index is a fraud. Anyone who does their own shopping knows it. Put in a garden and develop relationships with food producers who take cash or barter. When things get very bad, farmers will not deal with strangers. Sock away tins of food on sale, break in a garden, stockpile toilet paper, toothpaste and other sundries. Plan for a complete breakdown in the transport, retail, banking sectors that lasts for 3 - 6 months. Do those things and you will sleep better.
Coles in AUS have permanently dropped the price of Milk to $2 for a 2 Litre bottle and $3 for a 3 litre bottle. So when Fonterra/Woolies or Foodstuffs try to justify the current price of milk just ask why as the worlds most efficient producer of dairy NZ'ers can't enjoy the same cost benefits as their AUS cousins. Price gouging I say.
Just looking at the average composition of milk at peak production for the Waikato:
4.7% carbohydrate
4.8% butterfat
3.6% protein
And the composition of NZ standard milk as per the label on what you buy in the supermarket:
4.7% carbohydrate
3.3% butterfat
3.1% protein
More than 30% of the most valuable milk component has been stripped in "standardising" our milk, and I think most of what we export as WMP is only 26% butterfat.
Does anyone have figures for some of NZ's low fat fresh milks?
Can't give you the figures .. but have a look at the milk in NZ supermarkets .. it comes as yellow top, green top, blue top, and silver top .. from what I observed .. none of them say full-cream-milk as coles do with their permeate, stripped out by-product white-water ..
The $1 /L milk in Oz is because of a price war where the Supermarkets are selling below cost as a loss leader.
The warehouse has milk at $6.50 for 4 litre (they have has specials at $6.25 which is the same as A41.20 per litre). A$4 = NZ$5.20
Another reason to worry about food price rises
"Given the drought in China, Chinese authorities are then planning to import Wheat and Rice to feed its billions. China has the purchasing power and can move in fast to deplete world supply in a very short period of time. This will act like dynamite to volatile food trading market which can potentially rise very fast."
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