Food prices not increasing

June 14th, 2016 at 2:00 pm by David Farrar


Food is overall slightly cheaper than a year ago, and as you can see food inflation has been under 2% for the last five years. Compare this to previous periods.

In total food at the end of nine years of Labour was 37.1% more expensive then when they came in. By comparison after seven years five months of National food prices are only 10.2% more expensive.

Families need to be able to afford food

February 14th, 2016 at 4:00 pm by David Farrar

Stats reports:

Despite the rise in monthly food prices, prices are still 0.6 percent lower than a year ago. The fall was led by lower grocery food prices (down 2.1 percent), due to lower prices for fresh milk (down 9.0 percent), cakes and biscuits (down 6.2 percent), and yoghurt (down 11 percent). The fall was partly offset by price rises for chocolate and cheese.

Fruit and vegetable prices decreased 1.2 percent over the year.

Food prices increased 37.1% under Labour. In the seven years since 2008 food prices have only increased 10.5%.

Food cheaper than a year ago

January 18th, 2016 at 7:00 am by David Farrar

Stats NZ reports:

In the year to December 2015 food prices decreased 1.3 percent, influenced by lower prices for grocery foods, Statistics New Zealand said today. This is the largest annual fall since July 2012.

Grocery food prices decreased 3.0 percent over the year, led by lower prices for some dairy products, and for breads and cereals. Fresh milk prices were down 14 percent compared with the same period last year.

Meat, poultry, and fish prices decreased 3.8 percent over the year, led by lower prices for chicken. Chicken prices are now at their lowest level since January 2008.

“Chicken prices have fallen during the year, with the price for a kilo of chicken breast averaging $14.62 in December, compared with $16.60 a year ago,” consumer prices manager Matt Haigh said.

Fruit and vegetable prices increased 2.4 percent, with higher prices for avocados and bananas.

In seven years food prices have increased on average by just 1.2% a year. In the seven years before that they increased by 3.4% a year.

That may not sound a lot but over seven years it is.

If you were spending $300 a week on groceries at the start of the seven year period, then at 3.4% a year your food bill has increased to $371 a week. But at 1.2% a year it has increased to $325 a week only. So you have $46 a week more to spend or save.

The Labour cure/curse hits again

July 14th, 2015 at 7:00 am by David Farrar

Labour have a long history of claiming something is a crisis, and then you have record good news in that area. Their claims of a manufacturing crisis saw the manufacturing indexes hit 10 year highs.

Just last month Labour was claiming milk prices were too high. They said that it was awful that milk cost less than coke, which seemed a bizarre comparison. And as I pointed out they picked the one month in the last two years where in fact milk was cheaper than coke.

Their cure/curse continues with Stats NZ reporting this month:

In the year to June 2015, food prices decreased 0.1 percent, Statistics New Zealand said today. This drop follows eight consecutive food price increases since the year to October 2014.

Grocery food prices decreased 2.1 percent over the year, influenced by lower prices for fresh milk and bread. Prices for meat, poultry, and fish also decreased – down 1.9 percent from June 2014.

“The average price for 2 litres of blue-top milk was $3.36 in June, down 9.4 percent from its peak in November 2014,” consumers price index delivery manager Matt Haigh said. “The price of fresh milk is the lowest it’s been since August 2013, when 2 litres of blue-top cost $3.17.”

Well done Labour. Once again your timing is superb.

Some interesting data from the release:

  • Food prices overall are 0.1% lower than a year ago
  • Fresh milk is 6.7% lower than a year ago
  • Soft drinks are 4.2% higher than a year ago

ACT on Labour’s food policy

June 13th, 2015 at 2:00 pm by David Farrar

From the ACT newsletter:

Back Benchers
A fun time was had by all last week, as Parmjeet Parmar, Jacinda Ardern, James Shaw and David Seymour sparred over a few issues. Consistency was gleefully tossed out the window as Jacinda segued from complaining that the sort of high calorie food you can buy at supermarkets is too cheap, to a moment later complaining about a supermarket duopoly making food too expensive. We think her point was that that cheap food should be taxed so that low income people are….er….healthier but poorer?

That does indeed seem to be their policy!

Global food prices

May 7th, 2015 at 4:00 pm by David Farrar


The Greens “starved” themselves on Tuesday because their latest prediction is that people will starve as food becomes unaffordable globally.

A reader pointed out to me that the UN FAO has in fact recorded food prices have been massively dropping in the last four years.

In fact food prices have dropped every month for the last 15 months!

This is of course a crisis, and requires us to shoot one in five cows, in order to stop this starvation.

Food inflation remains low

December 11th, 2014 at 12:00 pm by David Farrar

Stats NZ reports:

In November 2014, food prices fell 0.5 percent, Statistics New Zealand said today. This follows no change overall in October and a 0.8 percent fall in September.

“Seasonally lower vegetable prices and lower prices for bread, cheese, and chocolate contributed to the latest fall,” prices manager Chris Pike said.

That’s all good for households. And how are prices compared to a year ago?

In the year to November 2014, food prices increased 0.6 percent …

Fruit and vegetable prices increased 0.7 percent. Higher prices for lettuce, potatoes, apples, and carrots were partly offset by lower prices for tomatoes, kumara, and avocados.

This means that as people get wage and salary increases, they get to keep more of it, rather than have it chewed up by inflation.

Food prices down

October 14th, 2014 at 7:00 am by David Farrar

Stats NZ reports:

Food prices fell 0.8 percent in September 2014, Statistics New Zealand said today. This fall follows a 0.3 percent rise in August and a 0.7 percent fall in July.

“Lower food prices in September came from seasonally cheaper vegetables, partly countered by a rise in meat prices,” prices manager Chris Pike said.

Fruit and vegetable prices fell 6.5 percent. Lower vegetable prices (down 11 percent) were the most significant contributor to the monthly fall in food prices, with price falls for lettuce, tomatoes, cucumber, and capsicums. …

Food prices decreased 0.1 percent in the year to September 2014, following a 0.7 percent increase in the year to August 2014.

In the year to September 2014, grocery food prices decreased 1.6 percent, influenced by lower bread prices (down 14 percent).

Food prices don’t have a lot to do with the Government, more the market. But it is good to reflect that it has been several years since we have had serious food inflation.

In the last three years food prices have only increased 0.8%. This compares with a 18.1% increase from 2005 to 2008.

A remarkable difference.

Issues that matter – the Economy

September 9th, 2014 at 4:00 pm by David Farrar

I think the economy matters and should be a much bigger issue in this election so I’ve put together almost a dozen graphs showing the difference between National and Labour’s record on 11 important economic indicators. These are issues that matter to families and businesses.



Food prices increased 18.6% in Labour’s last term. Food prices have increased only 1.3% in National’s last three years.



Labour left office with the current account deficit at 7.9% of GDP. It is now at 2.8%.



Power prices went up 22.9% in Labour’s last three years. The rate has halved to 12.1% in National’s last three years.



There was a net loss of 35,830 people to Australia in Labour’s last year of office. In the last 12 months only 7,150 net departures – and in recent months under 100 a month.



The overall cost of living increases or inflation totalled 9.5% in Labour’s last three years. A third of that now at 3.3% over the last three years of National.



Labour left office with an annual balance of trade deficit of $5.3 billion. In the last 12 months it has been a surplus of $1.3 billion



Remember Labour wanting to remove GST off fruit and vegetables. Under the last three years of Labour their prices went up 33.2%! Total increase in the last three years is a mere 1.4%.



The deficit in 2008/09 (on the fiscal settings left by Labour, and the impact of the GFC) was a massive $10.5 billion. Labour have opposed every piece of spending restraint since, but despite their opposition we are on track to a small $300 million surplus this year.



In June 2008 the median after tax income for a full time worker was $38,600 (in 2013 dollars). That has increased to $42,100 by June 2013, meaning the median FT worker has an extra $3,500 income to spend – and this during the worst recession the world has seen since the Great Depression.



Unemployment went up by 27,000 in Labour’s last year in office. It has declined by 17.000 in the last 12 months, and is projected to keep declining.

You are welcome to share any or all of these graphs. All data is directly from Stats NZ Infoshare except the income data where I have used the IRD website to calculate the tax impact and the Reserve Bank website to adjust them for inflation.

New Zealanders have a clear choice. Remaining on our present course which is surplus, falling unemployment, low prices, fewer Kiwis leaving, growing after tax incomes and affordable food – or a radical change of policy which would see many more taxes, less competition, a massively expanded state and an unstable alternate Government.

It is only through a healthy economy do we get to have the money to fund our health and education systems. And that brings me to my final graph.


That is economic growth for Labour’s last year in office, and National’s last 12 months.

Government do not directly control many of these economic measures. But they can and do impact them with their economic policies. The difference between where we are today and where we were in the mid to late 2000s is stark.

Food inflation now at -0.1%

August 27th, 2014 at 12:00 pm by David Farrar


Stats NZ has released their monthly food price index and it shows annual food inflation for the last 12 months was -0.1%, or basically food prices are stable.

The graph below shows food inflation since 2000. Note that the spike in 2011 was partly caused by the GST increase which saw income tax rates drop to compensate.

Food is one of the basic necessities, and the cost of food is a major factor for families. Food prices are mainly impacted by global and domestic markets, but government policies that impact the economy also have an effect.

Over the five years 8 months since November 2011, food prices have increased 10.3% and fruit and vegetable prices have increased 12.5%. On a per annum basis this is 1.8% and 2.2% food inflation respectively.

During the nine previous years, annual food inflation averaged 4.1% and fruit & vegetable prices increased 5.8% per year on average. Fruit and veges costs 52% more in November 2008 than November 1999.

Food prices

March 13th, 2014 at 4:00 pm by David Farrar

Food Prices


Stats NZ updated the Food Price Index today and the good news is that food prices are only 0.2% higher than a year ago. In fact food prices are only 0.1% greater than two years ago. This stuff matters, as food inflation hits poor to middle income households the most.

Also fruit and vegetables prices are 5.6% lower than a year ago and remarkably 4.3% lower than even three years ago.


Milk cheaper, beer price soars

February 18th, 2014 at 3:00 pm by David Farrar

Stats NZ reports:

The milk’s a touch cheaper, but the beer’s more expensive than it used to be, according to Statistics New Zealand’s annual snapshot of our country.

New Zealand in Profile 2014, released today, shows the average price of two litres of milk fell from $3.23 in 2008 to $3.19 last year, while an average 400ml glass of beer went up from $4.47 to $5.78 in the same five years.

So since 2008 the price of milk has dropped 1.2% and the price of beer has gone up 29.3%. That’s sad!

CPI 0.1% for quarter

January 21st, 2014 at 2:00 pm by David Farrar

Stats NZ reports:

The consumers price index (CPI) rose 0.1 percent in the December 2013 quarter, Statistics New Zealand said today. Higher international air fares and rising housing and dairy prices were partly countered by lower vegetable prices and cheaper petrol.

International air fares rose 12 percent in the December 2013 quarter – the highest quarterly rise since the December 2009 quarter. “International air fares usually rise in December quarters. This quarter’s rise reflects seasonally higher air fares to Asia and Europe,” prices manager Chris Pike said. Package holiday prices (up 7.3 percent) also showed a seasonal rise.

Prices for housing and household utilities (up 0.5 percent) also rose, reflecting higher prices for property maintenance, purchase of newly built houses, and rentals for housing.

Annual inflation is 1.6%which is higher than I like it (I believe in aiming for 1%) but under the midpoint of the 1% to 3% range.

I prefer to look at the long-term series. Here are some comparisons of average annual price increases over the last five years (Dec 08 to Dec 13) compared to the previous five years (Dec 03 to Dec 08).

  • Electricity 3.9% compared to 7.8%
  • Household Energy 3.6% compared to 10.0%
  • Food 1.7% compared to 3.4%
  • Fruit & Vegetables 0.6% compared to 6.4%
  • Rental Housing 1.9% compared to 3.6%
  • Home Ownership 2.9% compared to 8.0%

Labour are very good at claiming they will lower food prices, electricity prices and housing costs – but their track record speaks for itself. Last election they campaigned to remove GST on fruit and vegetables. Well under the last five years of Labour they increased by 32%, and under five years of National just 3%.

Food inflation

November 14th, 2013 at 11:00 am by David Farrar

Stuff reports:

Statistics New Zealand also measures the cost of a standard supermarket trolley full of grub over time – called “food price inflation”.

That index has jumped by one third over the last 10 years, and led to a 25 per cent drop in our purchasing power.

Food prices have indeed gone up 33% in the last ten years, but I’m not sure about that figure for a drop in purchasing power as after tax incomes have gone up more than that.

It is useful to break the 33% down by year. For each year to October, food inflation was:

  • 2004 – 1.1%
  • 2005 – 1.1%
  • 2006 – 4.0%
  • 2007 – 3.6%
  • 2008 – 9.9%
  • 2009 – 2.0%
  • 2010 – 5.1%
  • 2011 – 1.1%
  • 2012 – 0.3%
  • 2013 – 0.8%

So from Oct 05 to Oct 08, food prices increased a massive 17.5% approx. In the last 36 months they’ve gone up 2.2% only.


Food prices

October 14th, 2013 at 7:00 am by David Farrar



Stats NZ had the latest food inflation figures on Friday.

In the last three years food prices have gone up by 5.6%. In the period 2005 – 2008 food inflation was 18.1%.

Labour on costs

July 13th, 2013 at 9:00 am by David Farrar

David Shearer has said:

“Kiwi families have been hit with a triple dose of bad news in the last 24 hours, with petrol prices, power prices and food prices all jumping sharply,” says Labour Leader, David Shearer.

“Just in time for the school holidays, petrol prices went up four cents a litre to $2.26.9 for 91-octane.  That’s on top of the July 1 three cent increase courtesy of the Government hiking up petrol tax

Yes petrol prices have gone up – because the dollar has dropped 10% in the last couple of months. Now which party has been saying that the dollar is still far too high and the Govt should intervene to bring it even lower (and hence make petrol more expensive)? You’ve got it – Labour (and Greens and NZ First).

“The latest power price data shows domestic power prices rose by 2.2% in the last three months, which means the average household will pay an extra $50 a year. 

No it doesn’t. The electricity CPI was 1366 in Dec 2012 and 1368 in March 2013. That’s an increase of 0.1%, not 2.2%.

“And the cost of food rose by 2.1 per cent in June – 50 per cent faster than in June 2012 and June 2011.  In fact, it was the biggest single monthly food price increase since National pushed up GST in October 2010. 

Food prices vary greatly month to month. The sound comparison is food prices compared to a year ago as that takes account of seasonal variations. And food prices up just 0.6% higher than a year ago, which is historically a very small increase.

Food prices

May 14th, 2013 at 1:00 pm by David Farrar

The April Food Price Index is out.

  • Food prices down 0.2% on a year ago
  • Food prices up 7.4% since Dec 2008, over four and a third years.
  • Food prices increased 14.2% in the four years and four months to Dec 2008
  • Fruit and veges have increased only 4.3% since Dec 2008
  • Fruit and veges increased 20.6% in the four years and four months to Dec 2008

It seems the best way to keep the price of fruit and vegetables down has nothing to do with silly policies about removing GST on them.

Food inflation

March 13th, 2013 at 11:15 am by David Farrar

The latest Food Price Index is out and food prices dropped this month. What I tend to focus on in the long-term change in prices.

In the last four years (Feb 2009 to Feb 2013) food inflation was 7.6% and fruit and vegetable prices went up 9.5%. That is equivalent to annual food inflation of 1.8% and fruit and vegetable inflation of 2.3%.

For the four years prior (Feb 2005 to Feb 2009) food inflation was 20.8% and fruit and vegetable prices went up 22.1%. That is equivalent to annual food inflation of 4.8% and fruit and vegetable inflation of 5.1%.

Yay – Herald does a fact check

February 20th, 2013 at 2:00 pm by David Farrar

Amelia Wade in the NZ Herald reports:

Food prices are not becoming more expensive as the increase in cost tracks the rate of inflation, an economist says.

The cost of a basket of fruit and vegetables has increased by 14.2 per cent in five years, according to Statistics New Zealand data requested by theHerald.

The Consumers Price Index – a measure of inflation – has jumped 15.7 per cent over the same period.

Shamubeel Eaqub, principal economist at the NZ Institute of Economic Research, said the rising cost of food often inspired emotive reactions.

“When you look at these issues, you sort of need to step back a bit.”

Mr Eaqub said food prices were not becoming more unaffordable. Since 2000, the average hourly wage had risen by about 50 per cent while food prices had risen about 30 per cent, he said. “Typically speaking wages will rise quicker than the cost of living.

Good to see the Herald doing stories like this, rather than just reporting a lobby group calling for GST to come off fruit and vegetables.

Note on Sunday I also blogged on this issue.

Food prices

February 17th, 2013 at 11:52 am by David Farrar

Radio Live tweeted:

There are calls from Fight the Obesity Epidemic for the Government to act over the price of fruit and vegetables, which continue to soar.

These bunch of taxpayer funded lobbyists have been very vocal in the last few years. Whenever there is a monthly spike in food prices, they cry that it is the end of the world. They really seem to think we have obesity because of the price of spinach.

Anyway yes fruit and vege prices jumped 3.5% in January 2013. But there is this thing known as seasons. So what you should do is compare the price of fruit and veges to other Januaries.

Now the current fruit and vege price index is at 1223, and four years ago in January 2009 it was at 1128. This means that over four years it has increased 8.4% which is equal to annual increased of 2.04% compounding.

The increase in fruit and vegetables prices over the last four years is almost identical to the overall increase in food prices (8.2% v 8.1%) and smaller than the overall level of inflation which was 9.0% over four years.

So what causes fruit and vegetable prices to go up? Inflation. Policies such as printing money and looser monetary policy settings. Will the anti obesity lobbyists target policies that are inflationary?

This is of course the last four years only. If we went back a bit further, they might have cause for complaint. In the four years from January 2005 to January 2009 fruit and vegetable prices increased a staggering 26.2%.

Food prices

January 17th, 2013 at 12:00 pm by David Farrar

Stuff reported:

Food prices fell for a fourth month straight in December, led by a drop in non-alcoholic beverages which offset higher meat, poultry and fish prices.

The Food Price Index fell 0.2 per cent in the month, according to Statistics New Zealand following a 0.8 per cent decline in November. The current level of 1243 marks the lowest point on the index in almost two years.

I’ve calculated annual food price inflation since the series began in 1960, below.



So in one year, food prices increased 25%. I guess there was lots of money being printed that year.

If we look at post 1990 only:



So three big spikes post 1990. One was in 2001, another in 2008 and the third in 2011. The latter one being impacted by the GST increase.

If you look at food inflation over each three year approx electoral term, the cumulative annual increases were:

  • 1991 – 1993: -0.1% (go Ruth)
  • 1994 – 1996: 4.3%
  • 1997 – 1999: 4.2%
  • 2000 – 2002: 11.1%
  • 2003 – 2005: 2.7%
  • 2006 – 2008: 18.4%
  • 2009 – 2011: 6.6%

Annual food inflation in 2012 is -0.9% so far. Useful to recall this when you see stories about the rising cost of food!

Low inflation

April 20th, 2012 at 10:58 am by David Farrar

The latest inflation figures show up for me how silly Labour’s election policies were. Do you remember how they campaigned on removing GST off fruit and vegetables, because people can’t afford them?

Well in the last year the average cost of fruit and vegetables has dropped 6.6%.

Overall food prices have increased just 0.6% in the last year. That is good for especially low income families, as food makes up a larger proportion of their budget.

Clothing costs increased only 0.1% over 12 months also.

Also do you recall all the stories about massive increases in electricity prices? Well over 12 months the average cost is up 1.8% only.

Inflation overall for the year was 1.6%. Still a bit higher than I would like it. I believe 1% is the appropriate level to aim for (mid-point of 0% to 2% range) but the Reserve Bank will be happy with 1.6% and interest rates should remain low for a while yet.


January 15th, 2012 at 11:00 am by David Farrar

The SST report:

Woolworths New Zealand’s underlying profit margins have increased much faster than the cost of food for the past three years.

Australian-owned Woolworths, which operates Countdown supermarkets locally, said the results were due to improved efficiency, but the Green Party said an investigation into supermarket pricing is overdue and the industry is in need of tighter regulation.

What a bizarre comparison. It is a good thing that profits have increased faster than the cost of food.

Are the Greens saying that if profits had stayed the same, and food prices had increased more (hence decreasing the gap), that would be good for NZers?

Are they saying that if profits had stayed the same, and food prices had dropped (hence increasing the gap), that would be bad for NZers?

The comparison is absolutely nonsensical. What the Greens are really saying is that just don’t like companies making profits.

Calculations by the Sunday Star-Times show that once unusual costs and income are stripped out of Woolworths NZ’s accounts – items such as losses on the company’s investment in The Warehouse and the impact of the Christchurch earthquakes – the business posted year-on-year increases in earnings before interest and tax of 14.3%, 19.3% and 9.6% over the period.

Recorded food inflation over the same time-frame was 7%, -0.7% and 7.5%, according to Statistics New Zealand.

Again, so what? Take the middle year – EBIT increased 19.3% and food prices dropped by 0.7%. Great.

If you want to make the case the supermarkets are making excessive profits, then you need to be looking at profits compared to capital and dividends compared to share price etc.

The supermarket operator’s latest financial statements show that it earned gross revenue of $22.33 for each $100 of sales shoppers put through its tills in the year to the end of June 2011. That was up from $21.95 in 2010 and $21.61 the year before.

That’s higher than UK chains Tesco and Sainsburys, which earned gross revenue of 8.30 and 5.50 respectively for every 100 that went through their tills.

Gross margins mean little, especially when comparing just four companies in two countries. What about economy of scale, what about underlying costs?

Green MP Mojo Mathers said the country needs to act on food prices, and promote “genuine” competition.

“We are overdue for an investigation into supermarket pricing practices,” she told the Sunday Star-Times. “We need a supermarket code of conduct and a supermarket ombudsman set up to enforce the code.”

Such measures, now established in the UK and being considered in Australia, will help create a level playing field for consumers and producers, Mathers said.

I fail to understand what is needed beyond the current provisions of the Commerce Act and Fair Trading Act. I suspect the Green call for an Ombudsman is so the Greens can achieve their long held desire to ban foods they don’t approve of, such as large easter eggs which Sue Kedgley used to campaign against.

However, Woolworths said its margin and earnings improvements are the result of investment in efficient systems that have delivered food price increases below the rate of inflation.

“We think there is a really great business story in our results over the past three years, which, in the main, is due to the significant investment Woolworths has been making in Progressive Enterprises and our brand Countdown,” said Dave Chambers, the managing director of Woolworths’ subsidiary Progressive Enterprises.

“This investment in new systems, new warehouses, and new and refurbished stores is now well in excess of $1 billion and has meant our Countdown stores are more appealing to customers, as evidenced by our sales growing ahead of the market,” he said.

As a result, the company has reduced wastage, stock losses and trimmed stock in the supply chain.

Sounds good to me.

Food spending internationally

August 16th, 2011 at 1:00 pm by David Farrar

This comes from the Berkeley School of Journalism. Tends to show NZ is not too badly off in terms of food prices.

Fruit & Veges

August 11th, 2011 at 1:00 pm by David Farrar

Got sent a spreadsheet comparing costs in the Hawke’s Bay of various fruit and vegetables between outlets and products. It shows that the difference between various retail outlets is far far more than the 15% GST. Some examples – all expressed as costs/kg:

  • Pumpkins – 94c at roadside vendor v $1.99 supermarket
  • Cabbages – $1.88 at roadside vendor v $4.43 supermarket
  • Brocolli  – $5.11 at roadside vendor v $9.97 supermarket
  • Tomatoes – $14.56 at supermarket fresh v $3.75 canned
  • Beans – $6.57 frozen v $3.75 canned
  • Peas – $5.23 frozen v $3.75 canned v $2.49 Pams Peas

Amazing there is such a huge price variation.