Cost of living crisis: Annual food price increase reaches 14-year high

Annual food prices have reached a whopping 14-year high fuelled largely by grocery food and soaring fruit and vege prices.

The latest Stats NZ data revealed food prices were 10.1 percent higher in October in comparison to the same month last year.

It is almost 3 percent higher than inflation which remains high at 7.2 percent in the September quarter.

Food price index annual change.
Food price index annual change. Photo credit: Stats NZ

"This was the highest annual increase since November 2008," consumer prices senior manager Nicola Growden said.

The new figures follow an annual increase of 8.3 percent in both September and August.

Broken down by food categories, the biggest annual price increase in October were fruit and vegetables at 17 percent. 

Meat, poultry and fish prices followed with a 10 percent increase and grocery food prices increased by 9.7 percent.

Restaurants and ready-made meals saw the lowest increase of 7.5 percent.

Drinks were also hit by inflation, with non-alcoholic beverages recording an 8.7 percent increase.

"Increasing prices for barn-raised eggs, cheddar cheese, and two-minute noodles were the largest drivers within grocery food," Growden said.

Monthly food prices

Monthly food prices were 0.8 percent higher in October 2022 compared with September 2022, Stats NZ said. However, after adjusting for seasonal effects they were up 1.8 percent.

Fruit and vegetable prices after seasonal adjustment rose 1.3 percent.

"Previous patterns of seasonal price movement for fruit and vegetables suggest it's more typical to see a larger fall in fruit and vegetables for the October month," Growden said.

Grocery food contributed the most to the 0.8 percent monthly rise, Stats NZ said. This was led by rises in the cost of cheddar cheese (6.8 percent), barn-raised eggs (7.4 percent), and potato crisps (3.6 percent).

The increase comes as Kiwis continue to struggle with the high cost of living.

A Christchurch elderly woman told Newshub she found her 77-year-old nana eating cat food because she was struggling to make ends meet.

Even after the Government increased the superannuation rates for singles fortnightly from $1013.28 to $1076.48 in April, she said her nana was still struggling with the rising cost of living.

"She has to live paycheck to paycheck."

Another pensioner told AM she has friends who are living off two-minute noodles due to the increasing costs of fresh food, rent, and electricity.

Economists react

Infometrics principal economist Brad Olsen said the increase isn't good for inflation.

"That's not great news for general inflation, but the increase in stuff like two-minute noodles highlight that even food price gains are broadening," he tweeted.

He said the increase was in line with previous expectations for food prices.

"Other indicators, including fuel prices, international food prices, and employment and wage statistics, all point to cost pressures being sustained," Olsen said on Monday.

"High inflation remains persistent and pervasive across the economy, with domestic pricing pressures of concern. The lower New Zealand dollar will also keep imported inflation higher than otherwise."

ASB said food prices were higher than expected and predicted them to remain high.

"Price rises also look to be becoming more ingrained and broad-based and we expect annual food price inflation to remain elevated for a while yet," ASB Senior Economist Mark Smith said.

He said Statistics NZ concerningly noted that price rises were becoming more broad-based with rises in 125 of 162 food prices reported (82 in October 2021). 

"This points to price rises becoming more entrenched."

Political parties react

The National Party says Labour has no one to blame but themselves for the cost of living crisis.

"Today's numbers are sobering, and even more bad news for Kiwis trying to get ahead. Not since the worst days of the Global Financial Crisis have we seen such rapid food price growth," National's Finance spokesperson Nicola Willis said. "There is no escaping these eye-watering prices."

"Labour has put the blame on supermarkets, petrol companies, banks, COVID or the war in Ukraine - anyone but themselves."

Willis said National's plan is to fight inflation and bring discipline to Government spending. She said they want a tax reduction and to focus the Reserve Bank solely on an anti-inflation mandate.

National's Finance spokesperson Nicola Willis said Labour has no one to blame but themselves.
National's Finance spokesperson Nicola Willis said Labour has no one to blame but themselves. Photo credit: Newshub

The ACT Party shared a similar sentiment that Labour is to blame for high food prices.

"The price of food continues to rise and as much as they try to blame overseas factors, Labour needs to accept it has cooked up this problem all by itself," ACT Leader David Seymour said.

"The Government is entirely responsible for local conditions. This is the Government that indemnified the Reserve Bank after its insistence on a dual target helped encourage irresponsible monetary policy."

Seymour said Kiwis shouldn't have to accept that New Zealand is too expensive and called on the Government to take responsibility for its policies and spending.

The Green Party said ealier this year food price data shows we need livable incomes and improved access to food grants.

"This is an inequality crisis, plain & simple. Families on low incomes are struggling to put kai on the table," Green tweeted.