May Food Price Index rising 12.1% annually
A hoped-for fall in food prices has not eventuated, with the May Food Price Index rising 12.1% annually.
Statistics NZ said grocery food prices increased by 12.7% in May compared to the same month in 2022, while fruit and vegetable prices increased by 18.4% for the same period.
The increase in fruit and vegetable prices was driven by avocados, kūmara, potatoes, and tomatoes, and grocery food prices were pushed up by rising prices of fresh eggs, potato chips and lollies, the stats organisation said.
Meat, poultry, and fish prices increased by 11.7%.
Horticulture New Zealand Communications Manager Andrew Bristol said the fine print was that fruit and vegetable prices fell 2.9% between April and May. He said the industry faced ongoing challenging growing conditions.
United Fresh produce group General Manager Jerry Prendergast said the price of vegetables had dropped back in May, with significant increases in costs for the key vegetables singled out by Stats NZ.
He said prices for avocados, potatoes, tomatoes and kūmara "would not back off". Tomatoes had been severely impacted by disease and wouldn't come back in price until spring and kūmara prices wouldn't get any better until the new crop in February, he said.
Prendergast said there would be a good crop of leafy greens coming as growers had been able to plant in May, with some warm clear days.
He said there was cheap fruit available for consumers, with good deals on mandarins, apples and kiwifruit. Other vegetables such as broccolli would have periods of cheap buying.
"Don't go heart set [to the supermarket] with your shopping plan. When you go in, look for great value, and turn it into an opportunity."
The growing industry received a boost on Wednesday, as Prime Minister Chris Hipkins ruled out a new fertiliser tax.
A tax had been worrying farmers and growers, also facing a new emissions scheme.
Prendergast said the announcement by the prime minister "would take a little bit of pressure off".
From April to May, food prices rose 0.3% compared with April 2023. After adjusting for seasonal effects, they were up 0.5%.
In April food price inflation rose to its highest level in more than 35 years. The 12.5% food price inflation in the year to April 2023 was the highest level since September 1987.
Compared with April 2022, grocery food prices increased by 14.0% and fruit and vegetables prices increased by 22.5%.
Slowing down?
Food and Grocery Council Chief Executive Raewyn Bleakley said the continuing rise in food prices remained a concern, though there were indications the rate of increase was slowing.
“The cost of living crisis makes a competitive environment for suppliers even tighter, and suppliers are absorbing costs to stay affordable to consumers. Fresh produce remains a concern, though that is mainly a result of the slow growing season coming hard on the heels of the bad weather events and a very wet autumn.”
She noted new research which showed price inflation was not caused by profits, but rather by input prices such as ingredients, fuel, and the cost of doing business.
“It’s clear that once those factors are brought under control – and some of it is imported – we are likely to see a general easing in food price rises in line with the overall inflation rate."
The latest Infometrics-Foodstuffs New Zealand Grocery Supplier Cost Index reported an 8.8% annual increase in what suppliers charged supermarkets for goods in May.
The index measures the change in the cost of 60,000 grocery goods charged by suppliers to the Foodstuffs North Island and South Island cooperatives.
Foodstuffs NZ Managing Director Chris Quin said global indicators pointed to some of the main drivers of food price inflation peaking. He said international cost pressures were seeing an overall downward trend, but New Zealand wages and weather were still fuelling cost increases.
“This could see the cost of imported goods start to moderate ahead of a slowdown in cost increases on domestically produced grocery items.”
He said customers were cutting back on fresh fruit, veggies and meat, and shopping around to get the best deals.
The Government has introduced new legislation aimed at improving competition in the supermarket industry, including forcing the duopoly of Foodstuffs and Woolworths/Countdown to open up their wholesale networks, with a threat that wholesale prices may be set by a regulator if they don't play ball.
The appointment of a grocery commissioner to oversee competition in the industry, similar to the telecommunications commissioner, is expected soon.
Global concern
Earlier this month the United Nation's food agency published its food price index which showed a fall in prices for staples such as vegetable oils, cereals and dairy which pushed it to its lowest level in two years. The cost of meat, sugar and rice rose.
The index rose in April for first time in a year, with higher prices for sugar, meat and rice, and reached an all-time high in March 2022 after Russia invaded grain-exporter Ukraine.
The price of sugar has been rising for months, and increased 5.5% from April to May.
The Food and Agriculture Organisation (FAO) said international prices of rice continued increasing in May, "sustained by Asian purchases and tighter supplies in some exporting countries, such as Viet Nam and Pakistan".
The agency said its Cereal Price Index declined 4.8% in May from the previous month, led by a 9.8% drop in world maize quotations, "due to a favourable production outlook along a sluggish import demand".
World wheat prices declined by 3.5%, which it said reflected "ample" supplies and the extension of the Black Sea Grain Initiative which allowed Ukrainian grain out of the war-stricken nation.
In the European Union consumer food prices were on average almost 17% higher in April than a year earlier.
Governments in France, the United Kingdom and Hungary have taken action to halt the rise in food prices, with caps on the price of staple foods and France recently announcing a deal with food producers to cut prices on hundreds of items by up to 10% in July.
*Information collected from interest.co.nz