Food prices rise 8.2pc

Family staples drive inflation

Last updated 22:48 15/07/2008

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Annual food price rises have reached an 18-year high, bringing more calls to help struggling families.

Statistics New Zealand's latest food price index figures show a rise of 8.2 per cent in the year to June - the highest annual increase since June 1990, when a rise of 10 per cent was recorded after a GST increase the previous July.

In the past year, the grocery food group made the biggest contribution to higher prices, with dairy once again the main culprit. Cheddar cheese (up 61.9 per cent), fresh milk (up 22 per cent), butter (86.6 per cent) and bread (15.2 per cent) were the main drivers.

The consumer price index also had its biggest quarterly rise in 18 years, fuelled by food and petrol prices. It jumped a higher-than-expected 1.6 per cent in the June quarter.

Inflation hit 4 per cent in the June year and may reach 5 per cent later this year. Most economists now believe Reserve Bank governor Alan Bollard should begin cutting interest rates as early as next week, but say it is a "line-ball call" .

The latest figures prompted renewed calls for the Government to help struggling families. The Green Party said the Government should increase benefit levels and extend the in-work tax credit available through the Working For Families scheme to beneficiary families.

"It's terrible that children are going hungry in a food-producing country like New Zealand," social development spokeswoman Sue Bradford said.

Federation of Family Budgeting Services chief executive Raewyn Fox said the rising price of milk was a particular concern because it was such a staple for families.

Tony Carter, managing director of Foodstuffs New Zealand, which runs New World and Pak'n Save, said the company had noticed shoppers were opting for more budget brands. They had also been "trading down" on sizes - for instance, choosing smaller blocks of cheese.

Butter sales had declined and people were opting for cheaper alternatives, such as margarine.

He said the New Zealand dollar would influence any future price increases. "If the dollar stays where it is, then maybe the worst is over."

The most significant drops in the food price index were for tomatoes - which were 25.1 per cent cheaper than in June last year - and avocados, down 54.2 per cent. But fruit and vegetable prices increased by 8.7 per cent overall, with lettuce, potatoes and broccoli the biggest drivers.

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Poultry, bacon and minced beef all climbed in price and meat prices rose by 4.4 per cent overall. But ham and sausages were cheaper than a year ago.

Junk food offered little consolation. The cost of a box of chocolates rose 9.8 per cent between May and June, while icecream was up 2 per cent. And potato chips climbed 15.7 per cent during the year.

- © Fairfax NZ News

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5 comments

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Craig A. Wills #5 05:26 pm Jan 28 2009

The families who are struggling with their food bills now are those who fit within the middle income bracket. Previously, they had no need to budget. Those on low incomes, including large numbers of beneficiaries, have learnt to budget, and they have adapted to carry these skills through into a bleak economic phase of high food prices.

It is good to see Murray, that you were not sucked in by Key's phoney charm offensive.

Murray #4 05:26 pm Jan 28 2009

What an incredible argument from someone who has implied they are a school teacher? As a proactive citizen I suppose you are suggesting something akin to China's One Child Policy to your local MP? What a wanton dismissal of what is fundamental humanity?

I thought the issue would be "lifting people out of poverty" rather than a self-righteous argument about who "should or shouldn't bear children".

I listened carefully, but couldn't believe I heard John Key state on TV3 today, when asked about the above Green Party suggestion, that both working and beneficiary families received "Working for Families" tax credits; and then waffle into an avoidance of the whole issue. His statement was fundamentally incorrect?

John Key's explanation about what National could do if in government was contemptuous, to say the least, telling us that government spending is inflationary whereas taxcuts would be less so, "because a certain amount of it would be saved".

Mr Key: Money "saved" is in turn lent to borrowers, and borrowers spend. Current statistics show the average New Zealander is spending $1.16 for every $1.00 earned - the difference being his borrowing - a negative propensity to save. Inflation, Mr Key, arises when the same or lesser goods and services are being acquired by a higher quantum of money.

The National Party will run a higher fiscal deficit and borrow to pay for infrastructural projects, doing so in order to foot the highest bid on taxcuts.

THAT IS WHAT WILL BE INFLATIONARY, MR KEY.

Donna #3 05:26 pm Jan 28 2009

I agree wholeheartedly. I would have loved to have more children but made a decision not to as I could not afford to raise them in the way I would have wanted. My kids moaned enough about not having all the clothing labels, bought lunches and treats that others do. They were also taught the value of money by having to help out before being paid a minimal amount of pocket money or receiving some type of treat.

As a teacher it was incredibly obvious to me that a large proportion of those families who could least afford the labels, bought lunches and constant treats were the ones that had them.

I get incensed by the excuses made for those that are not responsible and have children willy nilly without any consideration for how they can afford it and whether they can provide for their needs.

The theories about people always spending to the full extent of their income are true. Give more and more will be spent.

I was always taught that "cut your suit to fit the cloth" and always put away 10% for a rainy day.

Dianne Bell #2 05:26 pm Jan 28 2009

I am sick to death of hearing about working families with children needing help - they get the working for families assistance from the Govt. They just need to stop eating out and wasting money on things that are a "want" not a "need". If they lower their expectations they wouldnt need so much money!

What about us single people or people on benefits?? and I'm not talking about unemployment benefits, as they at least have the chance to seek work - but people on long term invalids benefits who can never go back to work due to health problems. These people along with many pensioners are really doing it tough. Help needs to be given to the poorer sections of our community who cannot change their circumstances. After all there are only so many ways people can cut expenses and many people on these low incomes have cut their expenses as far as they can

Moreen Taylor #1 05:26 pm Jan 28 2009

I get sick of hearing about the assistance needed for families, usually people who have more children than they can afford to look after, then the taxpayer has to assist them, what about all the people who work 60hours a week, to try and feed and clothe themselves but don't have the children, should we just go without. what ever happen to user pays?

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