For the past decade, the rising cost of food has dominated headlines. However, food prices have not increased uniformly across all categories, which has significant health implications for New Zealanders. Last week, Stats NZ released data indicating the largest drop in food prices in six years. The upcoming consumer price index will offer a broader perspective on inflationary pressures, including food costs. Despite recent price declines, concerns over food security, affordability, and the nutritional quality of diets persist.
While long-term food price increases are evident, the change in relative prices—the cost of one food category compared to another—often goes unnoticed. These relative price changes are crucial as they subtly influence consumer choices. New research examines Stats NZ data from 2014 to 2023, covering 85 food items from 560 retail outlets, including supermarkets, greengrocers, fish shops, butchers, convenience stores, and various dining establishments across 12 urban areas.
Between July 2014 and March 2023, prices for some sweetened, processed foods and drinks, such as boxed chocolate, ice cream, soft drinks, and sports energy drinks, rose by around 14 percent. In contrast, prices for some fruits and vegetables increased by approximately 45 percent. When processed foods are relatively cheaper than fruits and vegetables, people tend to buy more of the former, leading to poor dietary habits and a rise in obesity and related health issues.
Globally, food prices have risen since 2020, driven by the COVID-19 pandemic and geopolitical tensions. However, many countries are now seeing a decrease in food price inflation. In New Zealand, although recent data from Stats NZ shows a similar trend, price inflation has been more significant and persistent than in other developed nations, suggesting unique contributing factors.
The structure of New Zealand’s retail food sector, dominated by Foodstuffs and Woolworths, is a significant factor. A lack of competition typically results in higher prices. However, the long-standing duopoly alone does not fully explain the changes in absolute and relative prices observed in the research.
New Zealand’s supply chain for fresh fruits and vegetables is particularly vulnerable to disruptions caused by extreme weather events due to increased regional specialization. While specialization improves production efficiency, it also increases susceptibility to localized shocks, such as Cyclone Gabrielle. This vulnerability is exacerbated by a sparse transport network.
International trade also affects the relative prices of various food types. New Zealand’s production and export composition differ significantly from its imports. For instance, the country is entirely dependent on sugar imports, while most fresh fruits and vegetables consumed domestically are locally grown. These factors can cause diverging food prices, with imported foods providing more price stability and domestically produced foods experiencing sharp price fluctuations.
The growing affordability gap between processed foods and healthy produce is more than an access issue; it significantly impacts health. In 2020-2021, one in three New Zealand adults was obese, with childhood obesity also on the rise. The incidence of diabetes increased from 35.7 per 1,000 people in 2012 to 41.5 per 1,000 people in 2021. Over the next 20 years, the number of diabetics is expected to rise by 70%-90%, with the annual cost of diabetes potentially increasing from NZ$2.1 billion to $3.5 billion.
These health burdens do not affect all New Zealanders equally. Poor diets disproportionately impact Indigenous people and those in lower economic strata. Pacific peoples and Māori have lower average incomes and higher obesity rates than New Zealanders of European descent. Rising relative prices of fruits and vegetables make it challenging for low-income families to afford healthy diets.
The increasing affordability of sweetened foods threatens New Zealanders’ health. Without intervention, the country may face higher rates of diet-related chronic diseases, further straining the healthcare system. -TIN Bureau