Food prices jumped 12.1% in March compared to same time last year

Monday, 17 April 2023

In March 2023 compared with March last year fruit and vegetables prices increased 22.2%.

Food prices increased 12.1% in March compared to the same time last year, a rate of growth not seen since the end of the 1980s.

The Stats NZ Food Price Index showed food prices were up 0.8% in March 2023 compared to February 2023, after a 1% month-on-month decline the previous month.

Year-on-year, fruit and vegetables prices increased 22.2%, meat, poultry, and fish prices increased 7.8%, grocery food prices increased 13.7% and restaurant meals and ready-to-eat food prices increased 8.7%.

“Increasing prices for barn or cage-raised eggs, potato chips, and six-pack yoghurt were the largest drivers within grocery food,” consumer prices manager James Mitchell said.

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A major grower, Gisborne-based Leaderbrand, has been battling to get product out on the roads and into supermarket shelves

Compared with last month, fruit and vegetables prices rose 0.5%, grocery prices were up 2.3% and restaurant meals and ready-to-eat food prices rose 0.5%.

Meat, poultry, and fish prices fell 1%.

President of United Fresh Jerry Prendergast said the stats showed yet another month of disruption to the country’s fresh produce industry off the back of a challenging summer.

Months of tropical conditions, rain, wind and cyclones had seen growers throughout the North Island struggle to put produce on tables, and while the dominant La Niña weather pattern that brought this weather was switching to an El Niño one, the horticulture industry warned that significant challenges remained.

Prendergast said the supply and demand model of the fresh produce industry meant price fluctuations were unavoidable.

But Prendergast said the FPI did not tell the whole story of fruit and vegetable pricing.

“The FPI uses a standardised ‘basket’ of goods. This doesn’t take into account the specials and seasonal pricing that are unique to the fruit and vegetable market. Shoppers that take advantage of those seasonal prices will find their costs have not risen nearly as much as the FPI would suggest,” he said.

As growers cleaned up their orchards and replanted, the fresh produce market would see a return to regular trading conditions, although Prendergast warned that long-term challenges remained.

“Like every other industry, we’re still battling the high costs of fuel and fertiliser and the shortage of labour. While everyone is looking hard at cutting costs as much as possible, we can’t avoid passing some of that expense on.”

ASB senior economist Mark Smith said the monthly food price increase was weaker than expected.

“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,” he said.

About 69% of items increased in price in March. Inflation running at more than 10% for fruit and vegetables and grocery foods provided little cover for beleaguered consumers, he said.

“It is our hope that annual food price inflation has peaked – or is close to it – given lower global food commodity prices. However, the risk is that the current upward momentum in food prices takes longer to slow.”

Infometrics chief forecaster Gareth Kiernan said grocery price inflation was still accelerating and had surpassed its 2008 high of 13.1% per annum.

“This figure is a reasonable indicator of underlying inflationary pressures because it doesn’t tend to be affected by seasonal factors and is less sensitive to commodity price movements.”

Many of the factors affecting food prices were outside the Reserve Bank’s control, but the broad strength of the numbers reinforced Infometrics’ view that inflation had yet to show signs of being brought under control, he said.

“There’s enough in there to suggest that there is still a breadth of drivers contributing to cost pressures. The CPI result later this week is unlikely to show any significant moderation in annual inflation.”