I just popped in to the supermarket for a couple of things which, as invariably happens, turned into a basket full and a checkout total more than twice the amount I was expecting.
The latest food price index from Statistics New Zealand helps to explain why: food prices inceased 2.7% in August which is the biggest rise since July 1989 when GST increased from 10% to 12.5%.
All five subgroups recorded upward contributions to the latest Food Price Index (FPI) increase, with the most significant upward contribution coming from the fruit and vegetables subgroup (up 9.6 percent). Within this subgroup, the main contribution came from vegetable prices (up 14.5 percent), driven by higher prices for lettuce (up 33.6 percent) and tomatoes (up 42.8 percent). If vegetable prices had remained constant at July 2008 prices, the FPI would have risen 1.3 percent.
Vegetable prices have increased by a total of 36.4 percent over the past four months, with growing conditions hampered by unusually wet weather.
Grocery food went up 1.9% and meat, poultry and fish increased by 2.6%.
The most significant upward contributions to these subgroups came from, in order of significance, higher prices for cakes and biscuits (up 8.0 percent), fresh milk (up 4.4 percent), and lamb (up 16.8 percent). The most significant downward contribution came from lower prices for yoghurt (down 8.9 percent).
The annual increase in food prices of 10.6% in the 12 months to August was the largest since the year to May 1990.
All five subgroups recorded upward contributions to the annual increase, with the most significant being the grocery food subgroup (up 13.1 percent). Within this subgroup, the main contributions came from higher prices for cheese (up 43.8 percent), bread (up 17.4 percent), fresh milk (up 12.5 percent), and butter (up 87.6 percent).
The fruit and vegetables subgroup rose 19.1 percent in the year to August 2008. The most significant upward contribution came from higher prices for lettuce (up 145.3 percent).
These increases are well above most increases in pay rates and come with high interest rates and the increase in the price of other necessities such as fuel and power.
All of those will be straining household incomes which will be contributing to the slowing domestic economy. That was one of the factors which prompted the Reserve Bank to drop interest rates this morning but it will take a while before the impact of that filters though to household budgets.