Those food prices are still rising till it hurts - with the annual rate of food price inflation reaching 12.1% in March - the highest rate since 1989.
The latest soaring food price figures come ahead of the release of the March quarter Consumers Price Index (CPI) on Thursday this week and that's likely to show overall annual inflation remaining over 7% for the fourth consecutive quarter.
Food prices make up 18.7% of the CPI.
The 12.1% annual food price inflation figure, which is up from 12.0% as of February, is the largest annual increase since September 1989 when the figure was 12.4%.
Kiwis are being "crushed at the checkout", National Party's finance spokesperson Nicola Willis says.
"Labour must say when and how they will get inflation under control. Annual food price growth has been above 3% since September 2021, and our overall inflation rate at 7.2% is now higher than Canada, the US, Australia, Singapore and Japan.
"This sad state of affairs is an unacceptable result of a Government without a plan to address the underlying causes of inflation," Willis said.
The weather disruptions (the Auckland Anniversary Weekend deluge and particularly Cyclone Gabrielle) in the early part of this year were expected to have an impact on the March prices.
However, ASB senior economist Mark Smith said there were "fewer than expected" signs of an immediate cyclone-induced boost to fruit and vegetable prices, but generalised rises were evident for grocery food price rises. Food prices rose 3.7% over Q1, contributing 0.7 percentage points to the first quarter CPI, he said. ASB economists are picking a 1.8% quarterly inflation figure and 7.2% annual rate when the CPI is released on Thursday.
Smith said 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."
Stats NZ's consumer prices manager James Mitchell said grocery food was the largest contributor to the food price rises, with increasing prices for barn or cage-raised eggs, potato chips, and six-pack yoghurt the largest drivers within grocery food.
But the annual increase was due to rises across all the broad food categories Stats NZ measures.
Compared with March 2022:
- grocery food prices increased by 14%
- fruit and vegetables prices increased by 22%
- restaurant meals and ready-to-eat food prices increased by 8.7%
- meat, poultry and fish prices increased by 7.8%
- non-alcoholic beverage prices increased by 8.2%.
The second-largest contributor to the annual movement was fruit and vegetables. The increase was driven by tomatoes, potatoes, and avocados.
In terms of monthly food prices, these rose 0.8% in March 2023 compared with February 2023. After adjusting for seasonal effects, they were up 0.5%.
The 2.3% increase in grocery food was the largest contributor to the monthly movement. Within this group, the items having the greatest impact were barn or cage-raised eggs, six-pack yoghurt, and boxed chocolates.
These price rises were partly offset by a 1.0% fall in meat, poultry, and fish.
The Government has been moving to improve competition in New Zealand's supermarket sector.
And the Green Party was quick on Monday to say that the Government needed to "get on" and pass the Grocery Industry Competition Bill, which among other things creates a regulatory regime for wholesale supply of groceries, without delay.
Green Party spokesperson for commerce and consumer affairs, Ricardo Menéndez March said NZ was "also long overdue a serious look at the need to force supermarkets to divest their subsidiary companies".
"The cruel truth is that food price rises driven by supermarket profiteering are making it harder and harder for people to afford to eat. The evidence for an excess profits tax on supermarkets could not be clearer."
117 Comments
Mine only cost a bit of personal effort. We are sick of the damn things. It's good their season is nearly over. All the puree, juice, bottled whole and relish has taken up so much room. The best thing though is our toms actually taste great, unlike the plastic food like substance from the supermarket cartel created out of/for "customer convenience".
It's obvious the current minimum wage of $22.70 isn't enough. Labour should up it to $30. This should help the low wage workers have more money to spend and keep up with high prices. Should give another significant pay bump to the teachers as well to cope with this stressful situation.
I am not sure if you are being sarcastic or not, but I will be. Perhaps we should keep increasing minimum wage until everybody is on it, no it no matter what their skill level is. That will definitely encourage more people to get an education, and the best and brightest to stay.
Families are hurting already on basic household budgets and that is rapidly worsening. The Finance Minister needs to apologise for his soothing reassurances that inflation was only going to be transitory because that is now proven to be a lie. The tragic irony is that the government introduced by PM Ardern that avowed to lift the burden on the least financially well off has achieved exactly the opposite.
All is good.
Dont forget Labour have just clarified that NZ isnt a proper democracy - that there are some other rules we follow that make us different So in NZ some specific elite have more entitlements and control over our resources (and related contract award)....
Soon i reckon they will clarify we are not a proper economy either.... in fact NZ have a new version of math -> 'Labour-10-dollar-pāngarau' and so inflation and interest rates are less important here than giving lots of our money to the born elite.
PS - would tie in with how Orr adapted things in NZ to account for cultural inclusion
There in lays my criticism of our COVID response. All the central banks followed the Fed without any independent evaluation of the situation or the regional outcomes.
America had certain benefits afforded them being the worlds reserve currency that provides different outcomes to say NZ applying a same policy. The world followed the Fed off a cliff but they were the only ones with a parachute.
Its about to uptick, buy now!!! momentum is a false idol, thou shalt not postpone investments. When have fundamentals of economics mattered to capital gains? you're a fool for now buying yesterday. sorry thats enough typeing for me tonight RP's recipe for fejoa rum has me in quite the styate
Those new staggering benefit/pension/wage rises are to ensure inflation keeps up next quarter - they already sorted last last quarter
Chippy and Orr gonna smash inflation records- that lot in the 70/80's will look like amateurs when the current lot are finished. be the longest highest inflation in NZ history (by far)
They have smashed so many other targets - i believe in them, remember these:
Record Current account deficit, global record house price bubble, worlds best lockdown, biggest OCR drop in OECD, record truancy....
Be kind people.
Where did you go to school? Please explain how wages are inflationary?, wages are just a price no different to power rent etc. wages dont push up inflation you think if everyone took a wage cut inflation would go away go down? Or we would see deflation? . This inflation was all caused by the govenment and low interest rates.
From Wikipedia
In macroeconomics, a wage-price spiral (also called a wage/price spiral or price/wage spiral) is a proposed explanation for inflation, in which wage increases cause price increases which in turn cause wage increases, in a positive feedback loop
Inflation is the increase of the money supply, look it up in the dictionary, of wait they changed the meaning of inflation, you might need an old school dictionary. Just for reference cpi is the measure in this country for a basket of goods and its an index of how much prices have moved thats it. Its completely manipulated, also just a note about productivity do you think if that was improved it would push down prices?, your dreaming.. someone always pays.
great white shark you are not understanding global finance, if the BoJ and the Swiss central bank and the FED are all printing like a man with free ink..... then some of that will seep into little old NZ (who owns Frucor etc etc etc).
There is a lot of imported inflation for sure, but if you put minimum wages up in a low tech country like NZ everyone wants a pay rise which means prices go up....
How can you maintain margins without prices up if your inputs go up?
I get it that people will suffer loss of effective income if they dont get wage rises but its naive at best to think these are not inflationary... can you explain how they are not inflationary?
From the dictionary:
Economics
a general increase in prices and fall in the purchasing value of money.
or from here https://www.stats.govt.nz/indicators/consumers-price-index-cpi
The consumers price index (CPI) is a measure of inflation for New Zealand households.
I'm sorry the department of statistics is not a good enough reference for you.
Stop making up your own definitions of words and saying everybody else is wrong. While increasing money supply can cause inflation it is not the definition of inflation. If you double money supply and also double the production of goods and services you will not get inflation.
LondonCNN —
Tens of thousands of England’s trainee doctors have gone on strike this week over pay. For many, hourly pay falls below that of some baristas and fast-food workers.
Junior doctors working in the country’s National Health Service (NHS) walked out Tuesday — the first of four days of strikes — demanding a 35% increase in annual salaries.
The British Medical Association, the trade union and professional body for UK doctors, says junior doctors in England have suffered a 26% cut to their pay since 2008 once inflation is taken into account.
Junior doctors in Scotland, Northern Ireland and Wales are on a different contract to those in England, though they have seen similar real-term cuts to their pay. They are not currently on strike.
Scary stuff. At this pace, we in the West should be grateful to attract even a small proportion of our best and brightest young into the medical profession.
We're not short of talent in the West to help make major breakthroughs in science, find innovative solutions to technical issues in engineering or save hundreds of lives in healthcare. Our brightest simply understand that they're better off building a career in helping the rich pick the right investments to make beefier returns on their abundant wealth.
Apparently this is likely the start of the next professional generation pushing back on the oldies who have stuffed their future,
They are over the damage caused to them by the elite (GFC, climate, etc) and now they are expected to put up with inflation, climate damage, warss and low wages again caused by the elite.
Likely the start of a global shift as they make their voices heard.
They are and they aren't. 4th form economics incorrectly assumes all businesses price based on cost of inputs + profit. Many/most businesses do not.
- They are inflationary if the business prices based on costs (tradies, etc...)
- They are not if the business prices based on Market affordability (Housing, banks, hospitality, Big box retail, etc....)
- They are also not, if the business is a price setter in the form of monopoly, duopoly, or cartel (Council, Govt, Electricity, Supermarkets, fuel, etc...)
Indeed.
Additionally, increasing wages for the worst off is more inflationary than an equivalent increase in earnings for more well off members of society. Why? Because they spend a larger proportion of the additional increase in earnings (people on higher wages save more as a proportion of their income).
There are many reasons to try lift up the purchasing power of those at the bottom. But not being inflationary is not one of them.
So are we saying in here that there should be a wage 'freeze' on all minimum wage earners,but a free for all for others because they are going to 'save' their raise and help the economy.
Personally looking at travel and new car trends,those flush with cash ain't saving it.
I would have thought any wage rise is going to be inflationary,it all adds to the cost of production or distribution.
If anything it should be the other way,raise the botoom,hold the top,close the gaps.
Yeah nah. I can remember being very p.o. in 1971 doing the same/better job at 16 than the older factory workers & getting paid less $, as did women in those days.
Lesson learned: I never joined a Union afterwards & stayed employed fulltime for the next 44 years, ended up in the Boardroom.
No the recent rise is unlikely to have made an impact yet but the current minimum wage is over 27% higher than it was in 2018 which likely has had an inflationary effect over time. I'm not suggesting minimum wages shouldn't rise but business will nearly always need to make up the cost in the prices they charge. With regards to food prices outstripping CPI inflation this would suggest a lack of competition in the NZ market is partly a factor also.
Correction: minimum wages are up 44% since Labour took office in 2017 (22.7/hr from 15.75), outpacing median wage growth by just under 2x.
We have the highest minimum wage as a % of median wage in the OECD. This is not a sign of success at all, rather a common feature among low-income economies.
On our minimum wage as a % of GDP per capita, we are ~75% (woah!) ranking alongside Colombia, Uganda and Mali. Thanks Cindy and Chippy.
If I heard restaurant (+cafe, takeaway) food prices had increased significantly, I would not be upset - I can see that as a genuine responsive sector and it would lead to some combination of happier staff, or more/new businesses trying to get some of that profit.
When I see that grocery prices are increasing significantly, I only see doom - that sector has developed an incredible ability to squeeze profit from all angles in our fairly constrained wee country.
Looking at the Woolworths Group Ltd FY22 Annual Report, it appears that their EBIT went down about 12.5% from FY21 to FY22 (From $361M to $316M). Given that inflation has been persistent from some time now, that doesn't really seem to square up with the narrative that Supermarkets are price gouging & taking outsized profits.
Granted that there's been some water under the bridge since then, and the FY23 results may tell a different story, does anyone have any idea whether or not this reporting is telling the whole story? Perhaps some clever arrangement with vertically integrated wholesaler's which serves to mask where the money goes? Or is it actually the case that the supermarkets aren't really ripping us off, and that's just a convenient headline?
Yes the EBITDA did drop 45 million 21-22. Sales increased 417 million year on year.
I am no accountant . But if I am reading the report right. For the 22 FY they claimed additional NZD 23 m of depreciation vs 21 FY for the NZ operation
and devalued their NZ operation goodwill by 48 m from 21 FY. So 71 m profit reduction combined.
LOL. Stuff's secondary headline is "but the Stats NZ Food Price Index shows relief could be on the way" - but nothing in their article to indicate that, except a quote for United Fresh President Jerry Prendergast who says food will get cheaper... the supermarkets already trying to deflect the spotlight.
https://www.newshub.co.nz/home/new-zealand/2023/04/group-of-supermarket…
How long does the government fiddle while our wallets burn? We need a national boycott of the supermarket edges. Make the effort. Buy your fruit,vege eggs from the local store. Buy your meat from the local butcher.
The national piss take has to end.
We've also added 1% net migrants to our population in just the last 5 months. What impact does that increase in aggregate demand have on inflation in a supply crunched economy such as ours? Unless a huge portion of these new workers are joining export businesses (which I seriously doubt), this is a great idea to dig our trade deficit hole deeper.
Who coined the word TRANSITORY INFLATION and all thos who supported and promoted for vested interest should be...............................
Started from FED nd supported and promoted by likes of RBNZ have done more harm than pandemic or any other issue ............and are not being held accountable infact enjoying perks of their posistion and immunity that comes with the position - worst that can happen to them is that they resign and get another post or retire with millions.
It was total group think when all the idiots running central banks around the world got together at Jackson Hole and talked each other into believing it was, despite all the evidence to the contrary.
Economists are supposed to use data to support their conclusions, but none of them did, they all used group delusion to support their conclusions. The beauty of it is that they can now blame each other for their own idiocy, abrogating their own responsibility and still claim top marks by checking their own homework. It's the sort of stuff you read about in fantastical tales, but its playing out in real life.
I guess if people massively reduce spending on outrageously priced foods such as broccoli and cabbage (saw a ‘half’ of what must have been a tiny cabbage for $4 at the supermarket 2 weeks ago) then all things being equal the price of these foods will moderate at least somewhat.
Anybody out there still thinking that Inflation is all because of overseas factors- most of the increases we have been seeing in our household is food grown and manufactured here in NZ - ie Whittakers, Watties, McCain, Griffins. Much cheaper to buy Aussie goods than the NZ equivalent.
Most of the OECD is watching inflation fall and ours is going through the roof
I was told that the first 2Qs would see considerable food price rises as the wholesalers and manufactures are being hammed on the input side. these have been baked in for some time, whats worrying is that the new minimum wage increases have yet to flow through, they will show up in Q3/4. There is nothing the RBNZ can do these prices are going up if we buy more or not.... its simply cost of production.
If Labour start a lollie scramble into election Orr is going to go nuts and hammer them.....
fuel subsidy is a joke just paid 1.91 for diesal -- really need to remove that whist fuel is back down in a lower than average for the last three years space -- or else it becomes a permanent reduction -- and always wages wages never productivity --- want a better wage produce more be more efficient -- thats the real key to prosperity
Higher cost of farm inputs (up 14.6% annually in December 2022) due to higher global cost of fertilisers and fuel is being passed on to food manufacturers.
Also, NZ's manufacturing industry, of which food & beverage manufacturing makes up a huge proportion, has a GVA per worker slightly lower than the rest of the economy (input: 10.7% of the workforce, output: 10% of GDP). That's not what you would expect in an "advanced" economy.
Don't worry though, Stuart Nash has a plan to transform the sector to support NZ's transition to a globally competitive, low emissions economy.
Cost increases at the production level have been widespread and persistent
Wages for seasonal staff have been pushed up for 5 years now as has the cost of looking after employees, insurance, power, rates , contractors etc etc. A sparky costs more than $100/hour plus increased travel to come fix a water pump -its a continual list of cost increases over a long period and while many are imported (fuel fertilizer) many are also Govt policy driven. Eggs for example - costs up due in large part to the way hens are farmed - and the losers are the poorest in our community who can no longer afford them.
having said this supermarkets are still gouging - potatoes at NW approx $40 for 10 kg's - at the growers market $12 for same weight - you do have the wash them though. Carrots only a 100% NW markup, same with pears and apples. Buying a Pak N Save is still one of the the fastest way to become a multimillionaire in NZ
The things I mostly eat have, if anything, gone down in price. Lamb shoulder chops, Scotch Fillet steak, pork chops were all very cheap this week and have been for the last few months. Butter too seems to have gotten cheaper. You really can do without tomatoes and kumara.
I assume the quantity was the same?
Packs of mince, for instance, are now 400 gm when they were previously 500 gm, and have a look at your toilet paper next time you buy it. The centre cardboard core is getting bigger, so less paper gets wrapped on it, but it looks the same outside size.
Shop around. The Countdown (Crofton Downs/Johnsonville) meats I have noticed have dropped in size and increased in price dramatically, often around 50-100%. But interestingly one of the most expensive New Worlds in the country (Wellington Thorndon), prices have hardly moved in a year and its now cheaper there than Johnsonville for a lot of meat. Pak n Save Petone/Paraparaumu have barely moved either.
Butchers have gone up as well, but its nowhere near the price rise seen in Countdowns. They seem to be having a laugh.
It's already been established here that there is a small group of mortgage holders who are more directly affected by OCR increases (recent buyers, those with bigger mortgages; so logically, new FHBs). The rest of the country can continue to spend up writ large, and they are. In fact, there's almost no moral basis to dish out further punishment to mortgage holders (who will already be massively trimming spending) if there's no spill-over to those without mortgages.
We have a far broader, far more effective lever we could pull if we really wanted to stuff up the purchasing power of everyone. We just aren't talking about pulling it.
How many of 'those without mortgages' are already feeling the pain due to inflation eating into their a) superannuation or b) residual income after paying the rent?
Oddly enough, there's a much bigger group affected than new FHBs - and that is OO who traded up over the last few years to DTIs they really couldn't afford, but the LVR said otherwise.
I suspect most of the bleating is actually coming from that group, with crocodile tears for FHB.
Unfortunately those groups you mention were always going to take the hit, people coming late to a Ponzi always do. Housing needs to fall quite a bit more to also start hitting the next people on the rung. Raising minimum wages will help insulate the most vulnerable. I suspect we will continue on this path until the mid-level earners start cutting back and the housing market has crashed to such a level that it loses all it's allure (that's going to take some time given the New Zealand mentality towards housing, lot's of spruiking myths to unpick)
The maths of this is really simple. Food imports are up by around 20% in price. Wholesale and retail margins have dropped a bit relative to peaks in late 2021. Domestic production has got more expensive due to fuel, fertiliser and interest (!) Costs. So, food prices here are up 12%. Suck it up kiwis - you're price takers and your central bank is clueless.
"Woolworths profits continue to rise through cost-of-living crisis" (NZH 28.02.2023)
'Woolworths reported $4.1b in sales revenue across NZ Countdown stores alone, up 1.3 per cent from the previous period. The company’s earnings before interest and tax (EBIT) in NZ was down 39.1 per cent from the previous period, coming in at $122 million'.
The supermarkets are doin it tough...Hmmm Maybe....lol Sales revenue up 1.3%, Are folk are cutting back or going without in NZ if the price rises are considered. Does this mean poverty is creeping into the Kiwi landscape? Miraculously a 14% net profit across NZ and Australia with a share dividend up 18% shows up in the report...Must be those Ozzies making us look poor...lol I see no benefit to lower income earners in these rate hikes and whilst they might be driving some asset values down the same cannot be said of basic essentials which is bordering promoting poverty . The food basket needs to be better protected in my opinion. Do we roll out the soup kitchens or start handing out food stamps to FULLTIME employees with LOW income jobs with the next hike? Yes we have had seasonal weather impacts that have influenced the food basket...but where is the consideration for such , Is it built into a 50bps hike? Surely the number crunchers should have had more consideration for the larger local picture. If folk are to resist asking for wage increases (to assist in the momentous fight against inflation...lol) What will their reward be.... higher food prices? Clearly the cart is before the horse and that horse is bolting.
"Labour must say when and how they will get inflation under control."
But that's the RBNZ job - they created this mess right...?
I seem to recall all these comments over the last 2 years or more before we really got up to our necks in it..
We're having unsustainable unemployment..
We need to cool the spending jets...
We need to avoid a wage - price spiral..
Minimum wage has gone up 44% from 2017 to the 22.70 this yr, but inflation increased only half an much as this (so far....)
Can't see anything actually being changed other than whack, whack with the OCR hammer..
Onions are cheap in India. No more than about 10c/kg. (600rupees/100kg) Not sure if that's retail or wholesale but either way dirt cheap. Farmers were holding protests in the last month about the low prices.
That Tory minister said in the last month or so about eating turnips because they were cheap. Maybe the same in NZ?
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.