Christmas shopping shock
Hawke’s Bay food prices rising faster than anywhere else in New Zealand
The Christmas food shopping shock is set to hit Hawke’s Bay the hardest of any New Zealand region. The latest Statistics New Zealand data shows residents of the fruit bowl of New Zealand have been getting a raw deal at the checkout over the past year.
According to its Food Price Index, residents of Napier and Hastings were paying 11 per cent more for food in October 2022 than they were in October 2021, more than any other major cities.
In one month alone, from September to October 2022, the cost of food increased in the Twin Cities by 1.6 per cent, a level of inflation generally only accepted by the Reserve Bank over 12 months.
Reserve Bank Governor Adrian Orr said last week it was trying to engineer a recession to bring down soaring inflation, which is nearing a 30-year high at 7.2 per cent, and asked Kiwis to reign in their spending.
The central bank delivered a record 75-basis point interest rate hike, taking the official cash rate to its highest level in 14 years, 4.25 per cent.
It has also forecast a shallow recession from the middle of next year, partly because of the higher interest rates it is imposing.
ASB Bank chief economist Nick Tuffley said there were a number of reasons Hawke’s Bay food prices were rising so fast, but chief among them was staff shortages in the region, particularly within its fruit industry.
“There have been a lot of increases in labour costs, product inefficiency, picking inefficiency — things like that which have contributed to the cost of goods going up.”
Regional weather also played a part in variations, he said, and Hawke’s Bay’s had a tough year of rain. In October, some horticulturalists reported they couldn’t even get their crops in the ground because it was too waterlogged.
The length of supermarkets’ supply chains, distribution costs including fuel, local salary and wage rates and operating costs were other factors, he said.
Tuffley said it was worth noting the national Food Price Index increase in the 12 months to October was about 10 per cent, which meant that the increases in Hastings and Napier were close to what had been seen around the rest of the country.
“We’re talking about a one per cent difference in magnitude there, so it’s not significantly higher,” Tuffley said.
He said economists expect the price increases will gradually slow down going forward, and that the Government had also made some moves to improve the labour supply issue.
“Arguably that [labour shortages] is one of the biggest challenges you’ve got — not just in the food sector and the agriculture/horticulture sector, but it is just across everywhere,” he said.
Christina McBeth, founder of food rescue organisation Nourished for Nil, said they had begun to see an increase in demand earlier in the year than normal with the increase in food prices.
“We certainly have had an increase in demand, quite steadily since the winter,” McBeth said.
“For us it was a bit of a surprise, because the number started jumping in October.”
She said the price increases were being felt by everyone, including volunteers at Nourished for Nil.
“It makes us even more grateful that we’re capturing surplus, because it is going to people who are definitely feeling the challenges of the current environment,” she said.