Inflation is under control so why are we still feeling a pinch in the pocket?

Tuesday, 18 March 2025

If you feel like sobbing at the supermarket checkout, you’re not alone and your feelings are valid ‒ food prices have increased by 27% since late 2019.

Although inflation is finally back where the Reserve Bank likes it to be after a wild few years post-Covid, prices for some of the basics are proving to be far less elastic.

Here are a few of the things we’re paying significantly more for now than we were five years ago, and why (because “inflation” only goes so far“).

Food

Huge spikes in the cost of things like olive oil (up 85% due to a global supply issues) and eggs (up 90% since the removal of battery farming in New Zealand in 2023) have contributed to the 27% overall increase, Infometrics chief forecaster Gareth Kiernan said.

The weather can also wreak havoc on produce prices, but those effects are temporary.

“For example, kumara prices were back to normal at the end of 2024, down 55% from the end of 2023 after the crop got wiped out by the floods at the start of 2023,” Kiernan said.

“We’re seeing a little more pressure coming through recently in some international commodities such as chocolate, coffee, and dairy due to constrained supply internationally.”

In a dollars-and-cents sense, here’s how average prices of a few basics have changed, according to Stats NZ data:

• Eggs: One dozen of the cheapest brand was $4.53 in January 2020, now $8.89.

• Milk: Two litres standard homogenised was $3.63, now $4.64.

• Bread: A 700-gram sliced wholegrain loaf was $3.56, now $4.22.

• Beef mince: One kilogram was $17.07, now $20.08.

• Plain biscuits: A 200g packet was $2.33, now $3.12.

Insurance

The cost of keeping your stuff covered has gone through the roof largely thanks to a run of severe weather events which gave international re-insurers (the people who insurer the insurers) some serious jitters.

Contents insurance premiums are up 62% on late 2019, while house, vehicle and health insurance have increased by 55%, 49% and 45% respectively. Life insurance premiums are up a comparatively paltry 4%.

“Re-insurers have significantly increased the risk rating associated with New Zealand due to several natural disasters, like the Auckland floods and Cyclone Gabrielle,” Kiernan said.

“But it was happening before then as well due to longer-term concerns about earthquakes and climate change.”

Higher health insurance costs reflected the increased costs of more advanced medical procedures and more demand on the health system from New Zealand’s ageing population, he said.

Petrol

If you’re going to brave the supermarket, make sure you check your receipt for fuel discounts because filling up the car also costs significantly more now than it did pre-Covid.

Back in 2020, a 30-litre tank of premium petrol cost $72 ($2.40 per litre), while a tank of regular unleaded was $66.90 ($2.23 per litre) and a full tank of diesel cost $44.10 ($1.47 per litre)

These days you can expect to pay $88.50 for the same volume of premium fuel ($2.95 per litre), $68.10 ($2.27 per litre) for regular and $63 ($2.10 per litre) for diesel.

Kiernan said conflict in Ukraine and the Middle East had pushed oil prices up at times over the last few years, but increasing output in North America had generally kept a cap on prices.

“More recently, worries about a global economic slowdown due to tariffs and uncertainty associated with US trade policy is tending to push oil prices down.”

Power

Household power prices are already up 12% since 2019 and set to rise again next month.

Data from the Ministry of Business, Innovation and Employment (MBIE) shows how the average retail price of power has risen.

In February 2020, a consumer on the cheapest low user rate available without a fixed term contract would have paid 30.8 cents per kilowatt hour.

Assuming they used an average of 22 kWh per day, their annual consumption of 8000 kWh would cost $2464.

But things have changed. Last month the same user would have been charged 35.7 cents per kilowatt hour.

Now, I know what you’re thinking ‒ that’s only about 5 cents more ‒ but 5 cents over 8000 kwh makes a big difference.

That consumer would now have to come up with $2856 per year (an extra $392) to pay their power bill.

And more shocks are on the way, Kiernan said.

“Households have mostly been shielded so far from higher wholesale electricity prices that we saw last year.

“However, from April 1, higher Transpower and lines company charges will come through at the same time as concerns about generation capacity throughout winter could lead to retail price rises as well, so bigger increases in electricity prices look likely in the next year.”

Rates

If you’re not making the most of council-funded spaces and services like libraries, parks and museums, it’s time to go get your money’s worth.

Local authority rates and other charges have risen 46% in the last five years, Kiernan said.

That’s down to a mix of higher costs for service provision (read: infrastructure construction costs), the need to make up for a lack of investment previously, more responsibility for local government and, “in some cases, a lack of spending discipline.”

And a reversal in the upward trend is unlikely.

“The outlook remains for rates to increase significantly faster than headline inflation.”