Food prices remain 'worryingly high' after 12.5% annual increase

Thursday, 13 July 2023

Food price increases are still “worryingly high”, with prices increasing 12.5% annually from June 2022 to June 2023.

The Stats NZ Food Price Index released on Thursday showed the annual increase was due to rises across all the broad food categories Stats NZ measures.

Grocery food prices increased 12.8%, fruit and vegetables prices increased 22%, restaurant meals and ready-to-eat food prices increased 9.2% and meat, poultry, and fish prices increased 11%.

Non-alcoholic beverage prices increased 9.7%.

'Increasing prices for fresh eggs, six-pack yoghurt, and cheddar cheese were the largest drivers within grocery food,” consumer prices manager James Mitchell said.

The second-largest contributor to the annual movement was fruit and vegetables. The increase in this group was driven by tomatoes, kūmara, and potatoes.

Compared to the month of May, food prices increased by 1.6% in June 2023. After adjusting for seasonal effects, they were up 0.9%.

“Prices for fruit and vegetables such as tomatoes, capsicums, and lettuce contributed the most to the overall monthly rise,” Mitchell said.

Annual food price increases have sat above 12% since prices reached a 34-year-high in February.

Dr Murat Ungor of the Department of Economics at University of Otago said prices weren’t showing signs of decreasing.

”Food prices continue to remain worryingly high. People are going to grocery stores and restaurants and are still witnessing prices gradually increasing. There is frustration regarding the persistent inflation.”

Despite New Zealand’s annual inflation rate dropping to 6.7% in March, consumers were yet to feel any benefit, he said.

ANZ economist Henry Russell said the bank expected food prices to be the biggest driver of the second quarter inflation release next week.

“Food prices are expected to contribute over 40% of the overall quarterly increase in the CPI. That said, we expect inflation to fall to 5.9% on an annual basis from 6.7% in March.”

The large increases in some of the components of the food price index were also out of step with global moves in food prices, he said.

“Global dairy and meat prices have shifted lower, but that hasn’t been evident in domestic prices.”

Infometrics chief forecaster Gareth Kiernan said on Thursday that by this time next year the tough times of high prices will likely be a distant memory.

While prices were not expected to drop, over time people’s pay should rise, he said.