Grocery bills keep growing as cost of staples skyrockets

Thursday, 31 March 2022

Rising food prices are a hot topic as New Zealand deals with its worst inflation in decades and supermarket bills blow out.

Last month, Stats NZ reported food prices were 6.8 per cent higher in February than a year earlier, the biggest annual increase since July 2011.

And shoppers are feeling it. In 2019, a family of four living in Auckland spent an average $395 a week on groceries – the same trolley would now cost upwards of $427.

But what’s behind the rising prices, and what can you do to rein in a runaway grocery bill?

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A dozen eggs cost $3.83 in 2017. Today they're $5.09. (File photo)

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How much are we paying for grocery staples, and how does that compare to five years ago?

Stats NZ’s food price index m easures changes in average prices for food and food services by tracking the cost of individual food items in a representative food basket.

A comparison of prices from June 2017 and January this year shows that while shoppers are paying considerably more for some grocery staples, other items have experienced smaller price rises.

Of the general grocery items tracked (excluding fresh produce, meat and seafood), pantry staples including canned tuna and spaghetti had of the steepest price increases.

The average cost of a 185g can of tuna has increased 24 per cent, from $2.46 in June 2017 to $3.06 in January this year, while the cost of a 420g can of spaghetti leapt 37 per cent, from $1.45 to $2.

In the baking aisle the cost of a 1.5kg bag of plain white flour increased by 10 per cent to $1.97, while the average price of 1.5kg of white sugar fell from $2.85 to $2.73.

The price of eggs, on the other hand, has ballooned, with the average cost of a dozen up from $3.83 in 2017 to $5.09, a 33 per cent change.

Consumers are feeling the effects of higher food production costs, Stats NZ says.

Sharp increases have also been seen in the dairy section.

A 500g block of butter, once $5.05, now costs an average of $5.48 (up 8.5 per cent), two litres of standard “blue top” milk now costs $3.89, up 12 per cent from $3.48 in 2017, and the average price of a 1kg block of mild cheddar cheese has risen 20 per cent to $11.14.

What’s pushing prices up?

All sorts of things, according to Stats NZ.

“There are many possible contributing factors, such as supply chain constraints, labour costs, and the high prices producers are achieving in export markets,” international trade manager Alasdair Allen said on Thursday.

“Another large contributor is the rising cost of food production.”

The value of imports of petroleum and petroleum products, needed to fuel the domestic food supply chain, increased 81 per cent across January and February, when compared to the same period last year.

Less visible, but just as important to production, were increases in imports of food wastes (used as animal feed), up 39 per cent; fertilisers, up 161 per cent; and machinery used in food production, up 14 per cent, Stats NZ data shows.

While the volume of these commodities imported has increased, higher prices have been the main driver of the year-on-year increases.

For example, the price per litre of imported diesel fuel has risen 58 per cent from $0.66 in February 2021 to $1.04 in February 2022. The price per kilogram of nitrogen fertilisers has increased 133 percent, from $0.43 to $0.99

Supermarket specials are not always what they seem, so it pays to read the fine print. (File photo)

Then there’s New Zealand’s supermarket duopoly, which Food and Grocery Council chief executive Katherine Rich said had “a choke hold” on food prices.

“This plays a significant factor because of the lack of competition in the market,” Rich said.

At the conclusion of its long-awaited market study on the $22 billion groceries industry, the Commerce Commission estimated Countdown-owner Woolworths NZ and Foodstuffs, which owns the Pak ’n Save, New World and Four Square brands, were making about $430 million a year in excess profits.

What are the tricks that can help shoppers save money?

Plan your meals and your shop

There’s a reason budgeting advisors keep beating this drum – when you plan your meals in advance, you’re more likely to buy only what you need.

If drawing up a detailed meal plan isn’t your thing, at least have some idea of what you want to be eating and what’s already in the fridge and pantry before you head to the shops.

Shop strategically

A cheaper price doesn’t always mean the best value, so it pays – often literally – to look for the unit price on grocery items.

In some supermarkets, the unit price – per 100ml or per 100g – is displayed alongside the total price of the product, allowing shoppers to quickly spot the best deal. Where the unit price isn’t given, brain power or the calculator on a smartphone will do the job.

A two-litre bottle of Anchor’s “blue top” offering is $4.91 or $2.46 a litre at Countdown this week, but a bottle of the supermarket’s own brand milk is $3.79, or $1.90 a litre. (File photo)

Don’t fall for supermarket tricks

Most of us are lazy, and the supermarkets know it. That’s why they often position pricey items at or close to eye level and cheaper alternatives on the lower shelves.

Most of us are also easily tempted, which is why you’ll find essentials like bread and milk at the far end of the store. Supermarkets know if a shopper has to walk the entire length of the store, they’re more likely to make other, non-essential purchases.

And beware of multibuys. Whether it's two for $4 or 10 for $10, it may not be the deal you think it is. There’s no point buying 10 of something if you could buy one for $1 so check the small print for the individual item price to be sure it's worth splashing the cash.

Buy home brand products

If you’ve ever seen an episode of Eat Well For Less, you’ll have seen participants try and fail to distinguish their favourite branded products from cheaper supermarket own brand varieties.

Milk is a classic example. A two-litre bottle of Anchor’s “blue top” offering is $4.91 or $2.46 a litre at Countdown this week, but a bottle of the supermarket’s own brand milk is $3.79, or $1.90 a litre.

And yet the only obvious difference is in the price.

Kids are particularly unlikely to notice if their cereal, biscuits or bread are swapped for a less pricey alternative and, depending on their appetites, this could result in a significant saving.

Do your grocery shop online (and on a full stomach)

Shopping online can be a great way to eliminate impulse buys.

Not only can you check the pantry before you throw a bottle of soy sauce or four cans of chopped tomatoes into your virtual trolley, shopping online also gives you a chance to see how much your shop will cost before you check out and tweak your choices if you need to.

Regardless of whether you shop online or in a physical store, eat something first. Shopping on an empty stomach is a sure-fire way to end up with far more in your trolley than you actually need.