Food price increases reach 14-year high
The annual food price increase has reached a 14-year high of 10.1 per cent.
And inflation is having a big effect on shopping habits as half of all customers report being in a precarious position, a major supermarket company said.
Stats NZ data released yesterday showed food prices jumped 0.8 per cent in the month of October — and fruit and vegetable prices increased by 17 per cent in a year.
“This was the highest annual increase since November 2008,” Stats NZ consumer prices senior manager Nicola Growden said.
Compared with October last year, grocery food prices were up 9.7 per cent.
Stats NZ yesterday revealed the price of restaurant meals and readyto-eat food jumped 7.5 per cent in the past year.
Meat, poultry, and fish prices increased 10 per cent. And nonalcoholic beverage prices surged by 8.7 per cent.
“Increasing prices for barn-raised eggs, cheddar cheese and two-minute noodles were the largest drivers within grocery food,” Growden said.
“Previous patterns of seasonal price movement for fruit and vegetables suggest it’s more typical to see a larger fall in fruit and vegetables for the October month,” she added.
Noodles, pasta sauce and capsicums were major recipe items in September inflation stats.
Monthly food prices were 0.8 per cent higher in October 2022 compared with the month before. After adjusting for seasonal effects, they were up 1.8 per cent.
Fruit and vegetable prices fell 5.2 per cent, but after seasonal adjustment rose 1.3 per cent.
ANZ economist Finn Robinson said businesses including food suppliers and retailers were facing rising costs and had to eventually pass some of those increases on to consumers.
He said it was surprising to see a jump in prices last month when October usually brought a 0.5 per cent decrease.
“It was certainly a stronger [result] than we had anticipated.”
He said inclement weather and disruption to supplies were impacting prices, as were rising labour costs and worker shortages.
“All of these costs really start to add up.”
The Stats NZ data was published shortly after new data in the United States showed inflation cooling dramatically in that country.
Stocks in the US surged overnight on news inflation in the US slowed in October. But an ASB economist said food price inflation in New Zealand would probably still be high for a while.
Annual food price inflation has now surpassed 10 per cent for the first time since 2008.
Mark Smith, ASB senior economist, said the increases reflected jumps in meat and grocery food prices.
The 1.8 per cent seasonallyadjusted climb in October was the biggest monthly leap in more than five years, he said.
“Price rises also look to be becoming more ingrained and broadbased.”
Beef, pork and lamb all increased more than 3 per cent last month, and chicken was up 1.3 per cent.
Coffee and soft drinks were getting more expensive, and driving the rise in non-alcoholic beverage prices, he said.
Rising wage costs were probably the main driver of a 7.5 per cent leap in prices of restaurant meals and ready-to-eat food. “Global food commodity prices have cooled a fraction of late, and the outlook is for some cooling in annual NZ food price inflation has yet to peak,” Smith said. “However, the risk is that the current upward momentum in food prices takes longer to slow.”
Customers cutting back
Foodstuffs NZ managing director Chris Quin said supermarket customers were changing shopping habits to try to outwit inflation.
“Half of our customers describe their financial situation as ‘precarious’.
“Overall, we’re seeing customers buying less, cutting out non-essential items, buying cheaper brands and shopping around to get the best deals.”
Consumer sentiment was pessimistic in this area, Quin said.
“Customers are hearing the message that 2023 may not provide relief for households as stubborn inflation continues to eat away at their weekly budget for everything, from paying the mortgage to keeping the lights on, to filling the car up and paying for groceries.”
The company’s brands include New World, Pak’nSave and Four Square.
The Green Party said supermarkets were profiteering from families struggling to put food on the table.
“The Government needs to stand up to big corporations making huge profits off the backs of families struggling to put food on the table,” Greens commerce and consumer affairs spokesman Ricardo Menndez March said. He said the Government should impose an “excess profits tax” on supermarkets.
The National Party said the Government must address immigration settings to fix labour shortages.
“New Zealanders are facing pressure at the pump, mayhem with their mortgages, and a crisis at the checkout,” National’s finance spokeswoman Nicola Willis said.
“The cost-of-living crisis is only getting worse and Labour has done nothing to get it under control.”
Willis said the Government was abdicating responsibility for rampant inflation.
“It is clear that widespread labour shortages are having an impact on driving up the grocery bill for Kiwis. The Government must urgently fix their broken immigration settings that are pushing up prices across the economy,” she said.
Act leader David Seymour said: “The price of food continues to rise and as much as they try to blame overseas factors, Labour needs to accept it has cooked up this problem all by itself.”
He said the annual 10.1 per cent increase was significantly higher than the annual 7.2 per cent consumers price index (CPI) recorded in the September 2022 quarter.
“There is a massive human cost in all of this.”
Seymour said the food price stats showed inflation was a local problem, caused by Labour’s economic mismanagement.
In September, when annual food price rises hit a 13-year high, ANZ senior economist Sharon Zollner said Russia’s invasion of Ukraine, freak weather events, fuel prices, a dearth of migrant labour, and cost increases throughout production and supply chains were all driving inflation to various degrees.