World's high prices eat into Kiwi food budgets

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If every supermarket bill seems bigger than the one the week before ... it probably is, and those prices are almost certain to keep going up.

International food prices rose steadily last year, reaching record levels in December - higher than those that sparked riots around the world in 2008, says the United Nations.

Statistics New Zealand figures show the price of tomatoes has gone up by almost $1 a kilogram since 2008, and a kilo of lamb chops costs $1.76 more than it did two years ago.

And shoppers already suffering from October's GST increase - not to mention rocketing fuel costs and higher ACC levies - may find more nasty surprises awaiting them at the checkout.

Bank of New Zealand economist Craig Ebert said overseas price increases took time to filter through, meaning the full impact of the latest commodity rally may not yet have been felt in New Zealand.

"There is a very strong upward trend in global food prices," Mr Ebert said.

"That creates obvious potential for that to feed through into [food] prices in due course. If that's to happen it will probably happen over the next three to six months.

In three to six months we'll probably have a better idea of what the next step is - whether it's the start of quite a nasty trend or whether it's going to burn itself out."

The UN lists Russia's worst drought in more than a century, as well as rising demand in developing nations such as China, as factors contributing to increased food costs.

Despite New Zealand being a food-producing nation, its people must pay international prices for what they eat.

And New Zealanders are becoming increasingly concerned about the price they are paying to eat.

A poll of more than 12,000 nzherald.co.nz readers this month found 85 per cent were worried about rising food costs.

Mangere Budgeting Services chief executive Darryl Evans said his organisation had seen a 62 per cent increase in the number of food parcels given out over the past 12 months.

"Food prices have just gone through the roof and I can't understand why the Government won't even consider taking GST off the basic food groups," Mr Evans said.

"Families are struggling - they are simply not able to put good quality food on the table."

Food and Grocery Council chief executive Katherine Rich said rising raw ingredient costs facing the food manufacturers her organisation represents would inevitably need to be passed on to the consumer.

And both sides of New Zealand's supermarket duopoly - Foodstuffs and Progressive Enterprises - say they will give their suppliers room to increase their prices, provided they can justify putting them up.

Ms Rich said sugar and wheat were among the most important ingredients for local food manufacturers.

And prices of these two have soared internationally.

Wheat hit a record high of £203.30 ($428.40) a tonne on the London market at the beginning of this month, and a tonne of white sugar cost £473.52 ($998), a 96 per cent increase on its price two years earlier.

Fonterra Brands NZ, the products division of the New Zealand dairy giant - which is required to buy its raw ingredients at market prices - said that over the past 12 months, its costs for milk, butter, yoghurt and cheese had risen by 30 to 150 per cent.

Its products include Anchor and Mainland cheese, as well as Tip Top icecream.

The international price of arabica coffee - the most widely drunk variety in New Zealand - has risen sharply over the past six months.

Last July last year a pound (453g) of beans was trading at US$1.70 ($2.24) on New York's Intercontinental Exchange, which sets the world price.

Last week, the price was above US$2.30.

New Zealand Coffee Roasters Association president Tony Kerridge said the high prices looked likely to stay, and local roasteries would not be able to absorb them.

As a result, most companies would be raising wholesale and retail prices by at least 10 per cent this year.

Rising demand from China, as well as excessive rainfall in Brazil - the world's biggest coffee producer - have been blamed for the jump in coffee prices.