Food prices up almost 6 per cent year-on-year, Stats NZ says
Monday, 14 February 2022
Food prices rose 2.7 per cent in January, their largest increase in five years, Stats NZ says.
It is the biggest monthly increase since January 2017, when prices lifted 2.8 per cent.
After removing regular seasonal impacts, food prices rose 1.1 per cent.
Fruit prices were up 2.7 per cent, and vegetable prices were up 5.9 per cent. There were higher prices for broccoli, lettuce, apples, strawberries, and kiwifruit. These were partly offset by lower prices for beans, grapes, and courgettes.
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“Food prices often increase in January,” consumer prices manager Katrina Dewbery said.
“However, prices increased by more than usual this January.”
In January 2021, monthly food prices rose 1.3 per cent, and in January 2020 they rose 2.1 per cent, both before removing the impact of seasonality.
The main contributor to the increase in January was higher prices for tomatoes.
“The average price of 1kg of tomatoes was $7.29 in January,” Dewbery said.
“This compares with $2.94 in January 2021 and $3.35 in January 2020.”
Ajay Jina, owner of Jina’s World of Fresh Produce, said last year was not a good comparison for tomato prices because they had been very cheap at the start of 2021. Last year, there was excess supply and exports were down. Disease issues and cropping problems this year had added to the price, he said.
“Growers are controlling the crops a lot more than they normally would and the costs for any grower at the moment are just skyrocketing.”
There were added costs through the supply chain, he said.
“The curve of cost increases is not a standard ascending curve you would normally get. This is far more dramatic than what it’s ever been.”
He said apple growers had also had problems finding enough workers to get the fruit picked. “I was speaking to my apple grower last week and he said thankfully he thinks he’ll have enough people to get most of the crop off but he doesn’t know. Once Covid hits his business, he doesn’t know where he stands. Over the last couple of years they've left a lot on the trees because there wasn’t enough labour to get them off.
“They've got one window to operate in and if they can’t, that’s it. It’s the same thing with everyone harvesting, if you don’t harvest within that window you’re in trouble. The labour shortage is horrendous.”
On an annual basis, food prices were 5.9 per cent higher in January than last year.
This is the biggest annual increase since August 2011, when annual food prices increased by 6.6 per cent.
ASB economist Mark Smith said it was likely that food price increases would continue. He said the increase in food prices was broad, which was likely to concern the Reserve Bank.
“You can’t really isolate any one specific component, it’s a lot more generalised,” he said. “If you’re seeing a more generalised increase in food prices coming through that sort of suggests inflationary pressures in general are becoming more generalised.”
There were a lot of influences pushing the same way, he said, including supply issues and labour shortages meeting strong demand.
“Global food commodity prices have been ratcheting up and that’s certainly flowing through to domestic prices as well. Meat prices lifted quite sharply in January.”
He said it was likely to be tough on households, who also faced increasing fuel prices. “That’s going to hit a lot of consumers pretty hard. Food is one of those things that it’s hard to cut back. You can substitute to cheaper items but you see petrol prices move up quite sharply and food prices doing the same. Household budgets are really being clobbered at the moment.”
A spokeswoman for Countdown said food price increases were part of a wider inflation picture. The consumer price index (CPI) hit an annual rate of 5.9 per cent in December.
“While there is ongoing pressure on supply chains due to the impacts of Covid-19, we work closely with our suppliers and supply chain partners to minimise these impacts for our customers.
“Tomatoes have been generally more expensive this year compared to previous years, due to a combination of the Pepino mosaci outbreak and ongoing Covid-19 related logistical challenges, which saw growers plant fewer tomatoes due to not having as many export opportunities,” she said.
“The good news is a new crop is about to ripen up, ready to hit stores in the next few weeks which should see prices come down again.”