Stats NZ says food prices were up 10.3% in the year to January 2023 - which is down on the 32-year high increase of 11.3% seen as at December

Still astronomically high - but showing some signs of moderating. That's the situation with food price increases.

According to the latest Stats NZ Food Price Index release for January 2023, our annual rate of food price inflation was 10.3% last month, down from the 32-year high of 11.3% seen as of December 2022.

The monthly rise for January was a chunky 1.7% - but there is generally a significant seasonal rise in food prices in January months. The 1.7% latest rise was below average economists' expectations of 2.0% and compares with a whopper 2.7% increase in January last year.

Significantly, the seasonally adjusted increase in January 2023 was just 0.3%, which compares with seasonally-adjusted rises of 1.0% in November 2022 and 1.1% in December.

ASB senior economist Mark Smith said the 0.3% seasonally adjusted climb in January was the lowest monthly increase since April last year, "halting the strong run evident since the second half of last year".

However, he said about 76% of food items (77% of expenditure weight) rose in January.

"Widespread rises for food prices provide little cover for consumers, who will likely be relooking to trim any fat from the food bill," he said.

"It is our hope that annual food price inflation has peaked given lower global food commodity prices. However, the risk is that rises in food prices takes longer to slow. Recent North Island storms are expected to push food prices higher still in the coming months."

Stats NZ said that in January 2023, the annual increase in prices was due to rises "across all the broad food categories we measure". Compared with January 2022:

• grocery food prices increased by 11%
• restaurant meals and ready-to-eat food increased by 8.3%
• fruit and vegetable prices increased by 16%
• meat, poultry, and fish prices increased by 9.2%
• non-alcoholic beverage prices increased by 7.1%.

"Increasing prices for cheddar cheese, barn or cage-raised eggs, and potato chips were the largest drivers within grocery food," Stats NZ's consumer prices manager James Mitchell said.

The second-largest contributor to the annual movement was restaurant meals and ready-to-eat food.

Stats NZ said in terms of the January monthly increase in food prices grocery food was the largest contributor. Within this group, the items having the greatest impact were boxed chocolates, potato chips, and barn or cage-raised eggs.

In January 2023 compared with December 2022:

• fruit and vegetable prices rose 3.1% (down 0.8% after seasonal adjustment)
• meat, poultry, and fish prices rose 1.9%
• grocery food prices rose 1.8% (up 0.9% after seasonal adjustment)
• non-alcoholic beverage prices rose 2.1%
• restaurant meals and ready-to-eat food prices rose 0.7%.

The Food Price Index contributes 18.7% of the composition of New Zealand's widely accepted measure of overall inflation, the Consumers Price Index (CPI), which makes it the third biggest part of the CPI behind housing and household utilities and transport.  

However, such has been the rise in cost of food during the past year that food prices have been having an outsized contribution - accounting for over a quarter of the 7.2% annual CPI inflation figure to December 2022 and second in size of contribution behind only housing related costs.