A 1.1 per cent rise in grocery prices was led by price increases of yoghurt, potato chips, and cheddar cheese, Stats NZ released today. Photo / Supplied
A 1.1 per cent rise in grocery prices was led by price increases of yoghurt, potato chips, and cheddar cheese, Stats NZ released today. Photo / Supplied
Classic Kiwi staples like cheese, milk and potato chips have led the big food price squeeze in the past year.
A 1.1 per cent rise in grocery prices was led by price increases of yoghurt, potato chips, and cheddar cheese, Stats NZ released today as food prices were up 10.7per cent this year compared to last year.
Prices for cheddar cheese, yoghurt, and standard two-litre milk drove the highest increases in food in the last year, while the second-largest contributor was fruit and vegetables which were up 20 per cent since November 2021.
It isn’t all bad news in the pre-Christmas front, as prices for strawberries fell 35 per cent, while tomatoes and broccoli dropped 42 per cent and 44 per cent respectively.
Restaurant meals and ready-to-eat food prices were up 8 per cent, while meat, poultry, and fish prices increased 12 per cent.
Westpac Senior Economist Satish Ranchhod said this year has seen strong increases in the prices of a range of household necessities including food, fuel, and housing.
Satish Ranchhod, senior economist at Westpac Bank. Photo / NZME
He said rising food costs are one of several fronts where Kiwi households will face a “squeeze”.
“You’ve got high inflation. You’ve also got mortgage rates that are pushing higher at a really rapid pace, and you’ve also got house prices that have continued to fall rapidly and for many households.”
Consumer NZ’s Gemma Rasmussen said, “For some households, putting food on the table over the Christmas and new year period is a concern, and this is understandable off the back of food price increases over the last year.”
Rasmussen said pressure on food supply stems from a range of factors, “from food shortages due to erratic weather, to increases in production cost due to surging fertilizer costs, as well as labour pressures and the disruption of grain export in Ukraine.”
“It really is a perfect storm for driving up pricing. We would like to have more confidence that our supermarket sector is truly competing – and to stop engaging in confusing pricing and promotional practices on the shop floor.”
Ranchhod said rising interest rates will hit households more significantly in the coming months as those re-fixing mortgage rates will face an increase of 3 per cent or more.
“The value of their assets has dropped. Put that all together and it’s a really powerful squeeze on households’ spending power, and I think that signals quite a significant slowdown in demand over the coming year.”
“We’re going to see increasing numbers of households seeing spending power getting squeezed and that does signal quite a big squeeze on overall economic demand, and we’re likely to see growth slowing very sharply,” he said.
The slowdown, he said, shows the economy slowing to stall speed over the coming year creating a brief slip into recession towards the end of 2023.
“Now that projected recession we think will be relatively shallow. But the more important thing for most households is that we’re now looking at an extended period where the economy is going to see weak growth.”
Rasmussen said, “We’re hesitant to give advice about purchasing food in the current climate as we recognise many households are pushed to the brink and trying their best in the face of very expensive food. Meal planning, setting a food budget, shopping by season for more affordable produce, buying frozen greens and comparing food prices at different supermarkets on apps like grocer.nz are all helpful ways to make an impact on your grocery bill.”
