23 May 2024

Households still in grip of high food costs

5:15 pm on 23 May 2024
Queues at Mt Wellington supermarkets after it was announced the country is moving into alert level 3 and then 4 in the next few days.

While prices have been softening so far this year, a monthly lift in April was the first increase in three months (file image). Photo: RNZ / Cole Eastham-Farrelly

Whangārei mother of two Kyla is struggling with the increased cost of food.

"We spend $300 to $400 a week and I feel like most weeks that is not even a trolley full. Every week it gets more expensive, we buy the same stuff pretty much every week and I notice a $1 to $2 increase on items every week," she says.

They previously would have eaten meat every night but now try to have a couple of "meatless" nights each week.

Most of her income went on covering daycare costs, she said, and her husband worked full-time as a truck driver.

"It's ridiculous the price of stuff. We shop at multiple different shops to get specials and it still doesn't make a difference. My son also has food needs as he's got ADHD so only eats certain foods, which we have to buy for him. Our daughter eats the complete opposite so we have to cater for both children and it feels impossible some weeks.

"We used to have takeout nights but we can't justify spending over $50 a week on that."

Auckland woman Julie has been feeling the pinch, too.

"I have a child who loves to bake and a lot of the essentials for that, like butter, have gone up, and that's been a bit tricky to manage, as we want to encourage his interest but also are mindful of costs at times when money is tight.

"My partner lost their job and we had a period of lower than usual income and it was very stressful having to rely on the credit card for groceries until he got a new job. We were lucky too; my income is high and we had savings. I can't imagine how hard it is for those living pay to pay."

Food inflation ran hot in recent years, peaking at year-on-year increases of more than 12 percent in the middle of last year.

While prices have been softening so far this year, a monthly lift in April was the first increase in three months.

Household living costs data shows that between 2008 and 2021 the proportion of income being spent on food lifted from 18 percent to 21 percent.

Woman shopping at the supermarket, she is checking a long grocery receipt and leaning on a cart, budgeting and lifestyle concept

Photo: 123RF

ASB senior economist Kim Mundy said for the lowest-income New Zealanders, the proportion had risen from 19 percent to 22.2 percent between 2008 and 2023.

A researcher at Kore Hiaki Zero Hunger Collective, Jennie Sim, said her analysis showed food prices had lifted about $40 to $50 a week year on year last year for a two-adult, two -child household.

Solo parents' costs were up about $30.

But she said that did not reveal the full extent of the impact on families, because many would not have been able to cover the increased costs.

"The reality is most households on low incomes don't spend that money because food is discretionary, it's the one thing they can squeeze... they don't have that money left after their housing costs and their fixed living costs so they're spending a fraction of what they should to get nutritional food. They're trying to get assistance via community food banks."

Fincap, the organisation that supports financial mentors, said the mentors in its network reported a drop in spending on groceries for their clients in 2023, to 19.6 percent of income because of the impact of other costs.

Mundy said that substitution effect was seen across the income brackets.

For the highest-income households, the proportion of income spent on food lifted from 15.9 percent in 2008 to 20.4 percent in 2023.

"Depending on where you are, if you started shopping at Farro now you're moving to New World then Countdown, then Pak'nSave or maybe you're now just purely shopping supermarket homebrand labels, or stuff that's nearly expired.

"You can make those substitutions to a degree so there will be an element of that going on. People love that anecdote at the moment of going to the Pak'nSave carpark and you've never seen more Mercedes SUVs in your life. There's that kind of thing the base numbers hide."

She said it should be the case that food price increases continued to slow.

"We do think that food prices more generally are going to keep coming down. In part it's driven by the fruit and vegetable Cyclone Gabrielle effect has largely come through, we've seen commodity prices globally come down which is helpful."

But she said there were still shocks - as seen with the increases in olive oil and cocoa in the most recent statistics.

"Those shocks are lifting at the same time as the fresh food prices are falling so we see an offset there. But to the extent that demand is slowing because of tighter monetary policy we should see food price inflation fall just like we're expecting inflation to fall elsewhere as well."

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