Rising living costs take shine off food price drop

The average price of two litres of milk fell from $3.23 in 2008 to $3.19 last year. Photo / Lynda Feringa

A hike in rents and the general cost of living are taking the shine off a significant slowdown in rising food prices, a budgeting service says.

The New Zealand in Profile study, released today by Statistics New Zealand, found that food prices increased by just 0.2 per cent last year - the lowest annual increase since 1999.

The Consumer Price Index, which measures the overall change in costs which households face, increased by 0.8 per cent during the same period.

The price of a loaf of white, sliced bread dropped in price last year to $1.94 from $1.97 in 2012, a kilogram of apples was $3.19 last year compared to $3.39 in 2012, and lamb chops were down to $12.29 per kg last year compared to $14.54 in 2012.

Fish and chips rose in price - up five cents on 2012 to $5.77.

"One of the factors that has contributed to that has been quite a strong New Zealand dollar, which has been able to offer prices which are not much more expensive or even cheaper in some cases than they were a year earlier,'' said Statistics New Zealand prices manager Chris Pike.

Mangere Budgeting Services chief executive Darryl Evans said the people who needed their help - mainly working families - were still feeling the pinch at the supermarket, particularly due to high rents.

"We see many families giving 60 - 65 per cent of their weekly income to a landlord. Of course that doesn't leave a lot left over once you've paid for the power and put a bit of petrol in the car. Unfortunately the commodity that gets left out week after week is the groceries.

Citing a University of Otago "true cost of living'' study, Mr Evans said feeding a family of four required spending about $230 a week on groceries while the average family seeking their help had just $83 a week at their disposal.

"We're seeing a lot of childhood obesity and that's because of a lot of families are relying on things like two minute noodles, which are cheap and fill the kids up. If you've only got $83 you can't buy a lot of fresh produce,'' he said.

Breakfast cereal was one seemingly basic product which was too expensive for many New Zealanders, he said.

"A lot of families now are relying on things like breakfast clubs being provided by various charities. Overwhelmingly the people we work with, you see the shopping trolleys full of two minute noodles because it's becoming part of a staple diet, and no breakfast cereal.''

The study also found that 52 per cent of New Zealanders said they had more than enough or enough money to live on; 6 per cent described their health as either excellent or very good; 69 per cent said they had never felt lonely in the last four weeks; and 94 per cent felt a sense of belonging to New Zealand.

It found that the median hourly earnings for New Zealanders increased from $18.70 in 2008 to $21.58 last year, yet they worked slightly fewer hours - 35.7 last year down from 36.5 in 2008.

It said New Zealand now had a population of 4.47 million, with 74 per cent identifying themselves as European, 14.9 per cent Maori, 11.8 per cent Asian, 7.4 per cent Pacific Peoples and 2.9 per cent `other'.