Food prices soar during lockdown as panic-buying pressure settles in

A flatlay of fresh vegetables, mushrooms and bread from a farmer's market, using cloth bags instead of plastic. A zero waste weekly shop for a couple who eat a lot of vegetables.
Photo credit: Getty Images

The price of food shot up while the country was in lockdown, causing the biggest annual increase in eight years.

Meat, dairy products and fruit and vegetables all cost more than they did this time last year. 

Cheese and crackers just got a lot more luxurious, along with the humble hot chip. The price of cheddar is up 17 percent on last year, crackers by 9 percent and potatoes a whopping 38 percent. 

Statistics NZ consumer prices manager Bryan Downes says it isn't the first time potato prices have risen.

"Usually the potato prices peak once a year, in December, January, this year we've seen them go up again," Downes says.

Even a bargain brand loaf of white bread has surged by 24 percent

Overall, the cost of food rose 1 percent in April, and by 4.4 percent over the past year which is the biggest annual price rise since 2012. But these price changes aren't all down to the supermarkets.

Panic buying put pressure on suppliers, so promotional discounts on some products had to be dropped in fear of them selling out. 

Countdown removed some promotions and suppliers promotions to Foodstuffs were reduced slightly for one week in March.

Countdown’s discounts had returned, but both supermarkets wouldn’t allow Newshub's cameras inside to film. 

Economists expect COVID-19 to put downward pressure on the price of nearly everything, but Reserve Bank chief economist Yuong Ha says continuous discounts are bad for the economy.

"If shops are having to do that year after year after year, it's telling you there's just an absence of demand. And in that environment, they won't be investing, they won't be borrowing, they'll probably be laying off workers," Ha says.

There is one thing that officials want to see get cheaper though - mortgage rates. 

"We don't want to see banks adding to the pressure, they need to be part of the solution," Ha says.

Kiwibank was one of the first to take its rates below 3 percent, and the bank's head of borrowing and savings, Chris Greig, believes it has found a good middle-ground.

"I think we've got the right balance there between saving and lending sides."

But the mortgage wars aren't over yet - the price of a home loan and the food you buy to eat are all expected to drop.