Rising incomes in New Zealand cannot keep up with food prices

Food prices are rising faster than wages.

Sungmi Kim / Stuff

Food prices are rising faster than wages.

New Zealanders’ incomes have risen rapidly in recent months – but not as fast as the price of food, the data shows.

Between March 2021 and June 2022, the average hourly wage increased by 7.2%. But over the same period, food prices increased by 8.1%.

Based on the labor cost index, since December 2018 there has been an 11.5% increase in food prices, but only a 6.2% increase in labor costs. workforce. Since December 2020, food prices have increased by 8.8%, but incomes by only 4.6%.

Economist Gareth Kiernan said it was a situation most New Zealanders had not seen for some time.

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During the 2010s, incomes rose faster than food prices, so people could buy relatively more food for the money they earned.

The exceptions were 2000 to 2001, when a sharp fall in the exchange rate pushed prices up, and 2007 to 2011, when inflation rose before the global financial crisis.

Other factors could also make this increase in food prices more difficult, he said.

“The current rise in food prices relative to income is perhaps more painful due to other factors that are reducing household disposable income, such as rising interest rates and high fuel costs.

“Furthermore, the widespread rise in inflation to its fastest rate in more than 30 years means that people may be more sensitive to current increases in food prices than to previous increases that occurred in 2000-01 and 2007 at 11.”

Since the last food inflation at its current rate in 2009, the price of tomatoes has increased by 162%, courgettes by 148.5%, cabbage by 138.1% and peppers by 118%.

ANZ chief economist Sharon Zollner said the relative price of food had been falling for a long time but had started to rise again.

This has been driven by a number of factors, including Chinese consumers wanting “more refined” foods, she said, and growing global food supply issues.

“It is likely that the relative price of food will continue to rise. This is bad news for humanity, but good news for New Zealand – even if the gains from it are not evenly distributed. This is good news for food exporters but bad news for households, especially low-income ones.


Grocery prices are up nearly 7.5% from the same period last year, according to Stats NZ.

She said people were “probably trading” so they could afford food.

“Restaurant hospitality spending is holding up. But anecdotally, restaurants report that people dine out but bargain, buy less expensive wine, or have no wine at all to cut expenses a bit.

“In the supermarket, you would expect to see people buying less steak and more sausages or less sausages and more beans. Cheese is now a luxury. People must eat but they must not eat what they ate before.

Zollner said the relief should come from the income side, with wages catching up. “We expect pretty decent wage growth. This is a problem from the Reserve Bank’s point of view.

A Countdown spokesperson said shoppers were “prioritizing value and affordability.”

At Foodstuffs, a spokesperson said customers are opting for more frozen fruits, vegetables, fish and meat because they offer good value and little waste.

A recent survey showed that nearly half of customers said they were cutting back on non-essentials, 36% were switching to cheaper brands, 31% were buying fewer items and 27% were cutting back on meat. Just under 15% reduced their fruit and vegetable consumption and 13% reduced their alcohol consumption.

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