Editorial: Buyer beware as food prices keep climbing

The price of fruit and vegetables in March was 22 per cent higher than at the same time last year. Photo / 123rf

EDITORIAL

Few who do the household shopping would have been surprised to hear fruit and vegetables prices are up 22 per cent compared with last year.

Little wonder Canstar research last month found the cost of paying for groceries has overtaken the cost of housing as the biggest financial worry for Kiwis. That’s unlikely to change, with Stats NZ data yesterday showing overall grocery prices jumped again in March and shot up by 14 per cent in a year.

There’s no comfort on the home front. Rents are at record highs and mortgage rates have risen steadily since late 2021 when the Reserve Bank embarked on a tightening cycle to try to rein in surging inflation.

Illustration / Rod Emmerson

The pinch has been felt around the world as countries seek economic equilibrium in the tail end of the Covid-19 pandemic.

In the UK, supermarket prices also increased at an annual rate of 17.5 per cent in March, according to market research group Kantar, the highest reading since records began in 2008, with the cost of eggs, milk and cheese the fastest risers.

Also in the year through March in the US, grocery prices jumped 8.4 per cent, outpacing overall inflation of 5 per cent. The good news there, however, is that prices have dipped in March, the first fall since September 2020.

In Australia, January inflation data from the Australian Bureau of Statistics showed the price of meat and seafood has risen by 8 per cent over the past year but some data there also suggests price pressure may be starting to ease.

One key difference for New Zealand, as the latest ASB Economic Forecast points out, is the extreme weather events around cyclones Hale and Gabrielle. These have caused shortages in fresh food and household goods as well as cars, and are conflating to hold inflation up.

New Zealand is not alone and we do have our own challenges but we also have opportunities. Tourism is steadily rising from the forced dormancy and is still only at two-thirds of pre-pandemic visitor numbers. International students are also back on the rise, although few believe it will reach the numbers New Zealand attracted before 2020.

The economy remains relatively buoyant and our spending reflects some confidence, based on strong employment. Latest New Zealand credit card data shows spending was up in March from the previous month, driven by big uptake in hospitality and travel.

ASB chief economist Nick Tuffley predicts a tough year ahead as the “stimulus to get us through the pandemic has been, arguably, too successful”.

Those bearing the worst of the price pressures are, naturally, those on low and fixed incomes with little savings in reserve. The Government has increased main benefits by 0.98 per cent to match the Consumer Price Index but those who can afford it should also support charities helping them out.

As in any tough times, the best approach is to look at what you can control, shop around and save where you can.

Food prices haven’t peaked here yet.