Cost of living: Food prices rise 12 percent in February, highest annual increase since 1989

Food prices have continued to soar in New Zealand with the new figures showing the biggest rise in over 30 years. 

Statistics NZ's food price index (FPI) was released on Monday showing a 12 percent increase year-on-year. 

The 12 percent annual increase in food prices is the highest since September 1989, according to Stats NZ.

Fruit and vegetables prices rose 23.1 percent, grocery food prices rose 12.2 percent, meat, poultry, and fish prices rose 9.8 percent, non-alcoholic beverage prices rose 9.1 percent and restaurant meals and ready-to-eat food prices rose 8.4 percent.

The monthly change saw food prices rise 1.5 percent in February and after seasonal adjustment, they rose 2.1 percent.

Stats NZ said the weather events in January and February impacted data collection for the FPI during the February. 

"Data collection for prices of a small amount of fresh fruit and vegetables was not completed for some weeks in the Auckland and Napier/Hastings regions," Stats NZ said. 

"A small amount of monthly data was also not collected. For any prices not collected, we have imputed these using similar prices from within the same region. This is our standard treatment for when prices are not available."

The latest index remained well above annual consumer inflation (7.2 percent).

It comes after a rise in food prices in January of 10.3 percent year-on-year.

Earlier on Monday, the Infometrics-Foodstuffs New Zealand Grocery Supplier Cost Index (GSCI) was released, which showed a 10.4 percent rise in February, an acceleration from the 10 percent in January. 

Infometrics Principal Economist Brad Olsen told AM Early on Monday Kiwis should be prepared for costs to get worse before they get better.

"At the moment, we're worried we'll continue to see those continued cost pressures and you'll see grocery supply costs and then food prices to consumers themselves go up and up," Olsen told AM Early host Nicky Styris. 

"We're currently at 10.4 percent on the annual measure, we're not seeing any real signs of relief yet and when we look through the various indicators, there is sort of a mixed bag." 

It's not just one area that's being hit hard, Olsen said all costs throughout the supermarket are affected. 

"We've seen the likes of frozen foods, they've also increased in cost quite considerably. General grocery goods, so your tinned goods and similar have also gone up. Butchery and meat costs have risen as well at a slightly lower price, but even when we look globally, we're seeing that global food prices have not started to ease materially yet, in fact, they went up in the last month," Olsen explained.

"It really does highlight that we're continuing to see those sort of cost pressures across the supply chains internationally and here domestically that are putting further and further challenges in front of suppliers."