Food Prices

The Herald on Sunday reports:

Prices of day-to-day food, groceries and accommodation are rising at almost their fastest rate in the past 20 years, according to an in-depth Herald on Sunday investigation.

Food prices did increase a lot in January 2011. But that does not mean the HoS claims are accurate, and secondly you need to be very careful to jump to conclusions when prices have been fairly stable for 11 months and have only increased since Christmas.

But wage levels aren’t keeping pace – meaning daily life is as expensive as it’s ever been.

A slogan direct from the Labour Party – but wrong. After tax wages have increased for someone on the average wage either 12% or 16% (off memory. You buy food from your after tax income not your before tax gross wage.

Prices for apples, carrots, mushrooms and potatoes have gone through the roof in the past 12 months, rising 50 per cent or more.

Really. Well the official Food Price Index records prices for all of those items. This is done by the neutral Stats NZ, and isn’t influenced by cheery picking stores.

From January 2010 to January 2011 (Feb food prices are due out Friday), the price for 1 kg of apples has gone up 3% only. For carrots it is 26%, mushrooms 4% and potatoes 35%.

So none of thse have gone up 50%, and for two of the four items, the increase is a magnitude less than claimed by the HoS.

Now let’s not minimise that carrots and potatoes have still increased a lot, and this will be a stretch for some budgets. But this is the nature of having a global market for food.

Lamb and fish have also gone up more than 10 per cent, as have cheese, milk and fruit juice.

According to the food price index, the increases are lamb 6%, fish 0%, cheese 17%, milk 9% and fruit juice -1%.

Now maybe the February Food Price Index will come up with results that back the HoS story, but I’m going to wait to rely on the official figures. I also wonder why the HoS did its own survey when they get a free survey done for them every month by Stats NZ – that is robust and reliable.

Yet statistics reveal wages and salaries increased only 1.7 per cent last year.

Again, you pay for your food out of your after tax income, not the nominal gross wage you get.

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