Eggs, yoghurt, cheese, tomatoes add to big jump in food bills

Tuesday, 13 September 2022

The price of tomatoes has risen steeply, as has the cost of many other food items.

Eggs, yoghurt and cheddar cheese led food price rises over the past year, as the cost of stocking up on groceries leapt by its largest margin in 13 years.

But over those 13 years, the biggest price increase overall came from tomatoes, which are up 162.2%.

Stats NZ’s latest Food Price Index shows food prices were up 8.3% in August compared with a year earlier.

It was the biggest jump since July 2009, when prices increased 8.4%. Since that time, courgettes had increased 148.85%, cabbage 138.12% and capsicums 118%.

* Higher vegetable price don't mean more money for farmers

Year on year, fruit and vegetables were up 15%. Restaurant and ready-to-eat food prices were up 6.5%. Meat, poultry and fish increased 7.6%.

“Increasing prices for eggs, yoghurt, and cheddar cheese were the largest drivers within grocery food,” Stats NZ consumer prices manager Katrina Dewbery said.

The average price of a dozen eggs increased from $4.65 last year to $5.85. A six-pack of flavoured yoghurt increased from $5.39 last year to $6.25. And cheddar cheese increased from $11.11 a kilogram last year to $12.62 last month.

Susan Kilsby, an agriculture economist at ANZ, said dairy prices had been strong internationally over the last year, which had a flow-on effect on local prices.

Over 13 years, butter prices were up 103%.

We are paying 8.3% more for food than a year ago.

“We have seen strength in dairy in general, which is probably one of the reasons we are seeing that come through now.”

She said egg prices could be driven by the rising costs of grain and of labour.

The second-largest contributor to the annual price movement was fruit and vegetables. The items within this group that influenced this movement the most were capsicums, potatoes, and onions.

Food prices were 1.1% higher in August than in July, or 0.9% when seasonally adjusted. Tomatoes, capsicum and cabbage helped drive that increase. A kilogram of tomatoes increased from $12.75 last month to $16.54 this month.

Aaron Beck, former Stats NZ senior manager for pricing, social and population insights, explains the food price index.

Westpac economist Satish Ranchhod said the food price rise was in part related to earlier poor growing conditions.

“However, the pressure on food prices has been widespread, with shortages of many items globally, as well as large increases in production costs including fuel, fertiliser and packaging materials.”

He said a big increase in wages had put pressure on prices at restaurants and takeaway food outlets.

“Shortages of labour have also hampered the harvesting of produce and processing of meat products.”

The Green Party said it highlighted a need for more action from the Government.

The party’s commerce and consumer affairs spokesperson, MP Ricardo Menéndez March, said there should be more support for incomes so people could afford food as well as a “high trust” model for accessing food grants from Work and Income.

“Finally, we need a long-term food strategy to ensure the people who produce, distribute and consume food – rather than the demands of global markets and profit-hungry corporations – are at the heart of food systems and policies.”

Foodstuffs said its average supplier cost for the products measured by Stats NZ was 8.2%, but it had increased prices to customers by 6.1%.

“Our customers are paying attention to what they’re spending and are looking to find value when shopping for their groceries,” Foodstuffs NZ managing director Chris Quin said.

“We’ve been measuring how we compare against the food price index for four months now, so that customers have a full and transparent picture of food cost changes and what’s driving them.”

He said labour shortages were also pushing up prices.

“Our domestic transport costs are continuing to be affected by persistently high fuel prices at the pump. We’ve seen fuel-related price increases for freight adjusted again in August to now sit at over 20% this year.

“International freight costs have also risen significantly, with the standard cost to Foodstuffs in this area rising from between $500,000 to $1 million to $2m to $3m per month. Per-container costs have more than doubled since the pandemic began, up from $2500 per 20-foot container in April 2020 to $6500 in July this year.”

Countdown said it had received four times as many requests for cost increases from suppliers last month than in August 2021. Those increases ranged from 1% to 72%.

“We pay our growers and farmers market prices for meat, dairy, fruit and vegetables, so higher international and local prices are reflected in what customers are paying for their food at the checkout. Compounding this, a large portion of the products Kiwis rely on are imported from overseas, such as bananas, flour, pasta and toiletries. Inflation on imported products is roughly double that of local products,” Countdown commercial director Steve Mills said.

“We understand the genuine cost pressures suppliers are under, whether that’s input costs like grain, fertiliser and freight, or domestic factors such as labour shortages and increased wage rates.

“However, we also know that our customers are facing higher cost of living pressures from all parts of the economy, not just groceries.”