Food prices jumped 1.1 per cent in December and were 11.3 per cent higher than a year earlier.
It was the biggest annual food price increase in 32 years, Stats NZ said today.
Fruit and vegetable prices increased 23 per cent year-on-year.
Rises across all the broad food categories were measured.
Grocery food prices were up 11 per cent, fruit and vegetable prices up 23 per cent, and restaurant meals and ready-to-eat food 7.8 per cent.
Meat, poultry and fish prices jumped 11 per cent, and non-alcoholic beverage prices by 7.3 per cent.
“Increasing prices for cheddar cheese, barn or cage-raised eggs, and potato chips were the largest drivers within grocery food,” Stats NZ consumer prices manager James Mitchell said.
In November, the annual food price increase reached a 14-year high of 10.1 per cent.
The price data was also released amid a landscape of concerns about inflation and a possible economic slowdown this year.
Electronic retail spending fell last month, to $166 million, or 2.5 per cent less than in November 2022.
Economists said it could take months for food prices to cool off.
Satish Ranchhod, Westpac senior economist, said recent poor weather and multiple supply chain disruptions were causing trouble for food prices.
“One of the ongoing concerns for us is the disruption to the global supply chain.”
Globally, grain shipments were disrupted, and that in turn affected animal feed prices, Ranchhod said.
Domestically, the liquid carbon dioxide crisis was also likely to push up prices for some carbonated beverages and beer, he said.
“What we’re seeing is some significant increases in household living costs, and food is a big one.”
Ranchhod said rising debt servicing costs from higher interest rates, affecting mortgages, would play a major role in the economy this year.
“What we have already seen is that households have started to wind back their spending.”
The December card spending data was an example of that, Ranchhod said.
And he said poor weather recently was affecting fresh produce production and prices.
Adverse weather usually tended to influence fruit and vegetable prices for several months, he said, so relief for shoppers might not arrive until autumn or early winter.
Economists at ASB said inflation should start cooling off, but consumers still faced a tough year.
“Food price rises remain ingrained, and it appears consumers are cutting back where they can.”
The bank said poor weather likely contributed to sharp rises for fruit, up 4.8 per cent month-on-month, and for vegetable prices, which jumped 6.6 per cent in one month.
“Price rises were elevated despite December being a month when more pre-Christmas discounting takes place,” ASB added.
“It is our hope that annual food price inflation has peaked, or is close to it, given lower global food commodity prices of late.”
But the economists added: “The risk is that the current upward momentum in food prices takes longer to slow.”
The Act Party today blamed Labour for the rising food prices.
“Prices are rising in part because there are not enough people to work and produce food,” party leader David Seymour said.
“What is also needed is a reduction in spending by the Government, and tax cuts so that working New Zealanders can keep more of their own money.”
He said egg prices were a major driver of the overall increase, and producers had been forced to prepare for “draconian new chicken laws” taking effect soon.
“January’s figures will likely be even worse as these laws come into effect.
“The Government should stop smothering food producers with bureaucracy and nonsensical rules.”
The National Party said prices had been creeping up for months and the Government had exacerbated the crisis.
“Rather than focusing on the cost of living, Labour have been focused on wasteful political pet projects like the TVNZ-RNZ merger and Three Waters,” National’s finance spokeswoman Nicola Willis said.
“Kiwis can’t escape this cost of living crisis. Everywhere they turn, they are facing mounting costs putting pressure on their household budgets, making it tough for them to get ahead.”
She added: “Many New Zealanders will be having to think twice before hosting their friends and family for a barbecue this summer, with the cost of meat increasing by 11 per cent in the past 12 months, and fruit and vegetable prices increasing 23 per cent.”
Supermarkets: It’s the weather - and a lot else
The Foodstuffs co-operatives said local cost pressures were affecting everyone growing, manufacturing and retailing food in New Zealand.
“Most are predicting that 2023 will be tougher for households, but we’ll be looking towards the second quarter of this year to see whether a clearer picture has emerged,” Foodstuffs NZ Managing Director Chris Quin said.
“It’s been a pretty tough summer so far for growing produce and it’s going to be a couple of weeks before the full impact of Cyclone Hale is known,” Quin added.
“We’ve had to import more fresh produce than in previous years because we couldn’t buy it here ... it just hasn’t been available locally.”
He said despite challenges, some bargains had been available over Christmas, including seasonal produce such as telegraph cucumbers, lettuce and broccoli.
“Overall, we’ve been hearing a lot about global commodity prices coming off their peak, while still at historical highs, and inflation pressures are easing in both the US and in the UK. The question is whether inflation has peaked or whether there’s still some way to go,” Quin said.
“International fuel prices and shipping costs are also moderating, but that relief is yet to be felt here since it takes longer for those changes to flow through to us in New Zealand.”
Foodstuffs said the tight labour market, increasing wages, weaker NZ dollar, increasing fertiliser costs for suppliers, and the upcoming end to fuel subsidies were also influencing prices.
As the crowd chanted, Seymour walked back into the Beehive with his MPs.