Why is New Zealand’s food inflation on the rise?

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 Why is New Zealand’s food inflation on the rise?

Highlights

  • Food prices in New Zealand saw their biggest jump in 13 years.
  • The prices were up 8.3% as compared to the previous year.
  • The products that saw the biggest jumps were yogurt, tomatoes, and eggs

Food prices saw their biggest annual jump in 13 years in September, new data from StatsNZ showed. Food prices in New Zealand jumped 8.3% in September compared with food prices a year earlier, it said.

Among the products that saw the highest jumps were eggs, yogurt, cheese, and tomatoes.

Even though this is quite worrying for the households that are struggling with food inflation, ANZ economists warn that the prices could rise further.

According to StatsNZ report released on 13 October, among different categories of products, grocery prices were up 7.7%, fruits and vegetables increased by 16%, restaurant meals and ready-to-eat food prices were up 6.9%, and meat and poultry prices increased by 6.7%.

According to Katrina Dewbery, consumer prices manager, Stats NZ, said that increasing prices for yoghurt, two-minute noodles, and tomato-based pasta sauce were the largest drivers within grocery food.

The second-largest contributors to the annual movement were fruits and vegetables. The items that influenced this movement were capsicums, tomatoes and broccoli.

Reasons for rising prices

As per analysts, food inflation in New Zealand is influenced mainly by weather conditions, which have an impact on crop yield, global commodity prices, and wage inflation.

Fertiliser prices add to the prices of food. If fertiliser prices are high, the cost of producing food goes up, or less food is produced.

According to the Stats NZ survey, the other important cause for the rise in food prices is labour shortages. Other obstacles in the economy are constraining growth and driving up prices, it said.

Where are food prices heading on a monthly basis?

While the year-on-year food price increase was 8.4%, monthly food prices were 0.4% higher in September 2022 compared with August 2022.

On a month-to-month basis, fruit and vegetable prices were down 0.1%, but once adjusted for seasonal effects, they were up 3.9%.

According to Dewbery, the seasonal movement for fruit and vegetables indicates that their prices usually rise in the month of September.

After adjusting for seasonal effects, they were up 0.9%. Fruit and vegetables fell 0.1%, but after seasonal adjustment, rose 3.9%.

“Seasonal movement for fruit and vegetable prices indicates that based on previous patterns, a larger fall in fruit and vegetable prices for the September month is more typical,” said Dewbery

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