Cost of living: Food now a bigger worry than housing

The cost of buying groceries is now the biggest financial concern for Kiwis. Photo / Supplied

The cost of paying for groceries is now the biggest worry for Kiwis usurping the cost of housing, new research from Canstar has revealed.

Around 20,000 were surveyed between February 2021 and January 2023 with 24 per cent stating that the price of food was the biggest worry.

That was up from 11 per cent in 2021. While house prices were the biggest worry for only 5 per cent - down from 10 per cent two years ago. Those worried about rental costs also dropped from 12 per cent to 10 per cent.

Canstar NZ general manager Jose George said the standard chat around the BBQ used to be the cost of housing.

“Now it’s the cost of food on the grill. Due to post-Covid inflation, and months of wild weather, the price of everyday supermarket staples has soared. And, as a result, the cost of putting dinner on the table has become by far the biggest financial concern for Kiwi households.”

Stats NZ figures show food prices rose 12 per cent in the year to February 2023, while fruit and vegetables rose 23 per cent.

Kiwis in the regions, women and those with incomes of between $30,000 and $80,000 were the most worried. Taranaki residents were the most concerned with 40 per cent citing the cost of groceries as their biggest worry.

Conversely Aucklanders were the least worried about the cost of food at 18 per cent with a high proportion concerned about the cost of renting at 13 per cent.

George said this was likely a reflection of Auckland’s higher rental prices and declining home ownership rates.

The cost of mortgage debt was also a growing worry with 10 per cent citing it as their biggest financial concern up from 3 per cent two years ago.

George said two years ago it barely registered as a concern.

“Now one in 10 Kiwis call it their major concern.” And that figure rose to 15 per cent of those aged in their 30s and 40s.

Higher numbers of those on higher incomes - those earning $120K or more - also said it was their biggest worry at 18 per cent.

George said this could reflect those who overleveraged themselves during the recent period of low interest rates.

Covid-19 has fallen away as the biggest financial worry with just 5 per cent citing it as an issue - down from 15 per cent two years ago.

Mortgage rates rising

Two year fixed term rates have more than doubled in the last two years from an average of 2.63 per cent to 6.7 per cent.

For a mortgage of $500,000 that meant payments had risen from $2276 to $3439 per month.

George said it was difficult for households to absorb these extra costs given the rising cost of basics.

The survey found two-thirds of mortgage holders had or will cut back on essential or non-essential items.

Homeowners were also pulling back on mortgage overpayments with just 22 per cent saying they overpay their mortgage down from 42 per cent two years ago.

The number switching mortgage lenders for a cheaper rate remained low with only 5 per cent doing so and only 7 per cent negotiating a better rate.

George said this reflected the difficulty in shifting lenders in the current environment in which lending applications were heavily scrutinised with banks stress-testing applicants at near double-digit rates.

Shares out of favour

Back in 2021 over 40 per cent of those in their 30s and 40s were investing in the sharemarket but that has dropped to 30 per cent now.

Men were still more active in investing than women while those on higher incomes - those earning over $120,000 - were more likely to invest but this was down to 39 per cent from 51 per cent.

Of those who were investing healthcare, technology and energy companies were popular.

Saving for retirement also remains a big worry.

Kiwis expect to need $457,000 in savings although that figure jumps to $600,000 for those over 60.

Only 41 per cent feel they are on track the raise the money they need.

But people are keeping a closer eye on their retirement fund with just over half knowing their balance and aware of the fees they are paying.

Around 63 per cent were aware of the performance of their KiwiSaver fund.