The cost of living is soaring across the globe thanks to the COVID-19 pandemic and Russia’s war in Ukraine – but while Kiwis’ shopping bills are skyrocketing as a result, we are still doing better than the United States.
High food prices at the supermarket checkout have forced consumers to make tough decisions as inflation continues to remain stubbornly high.
The most recent food price index from Statistics NZ found food prices were 12.1 percent higher in March 2023 than in March 2022 – largely driven by increases in grocery prices.
While looking at a supermarket receipt could be enough to make you scream, you could find comfort in the fact New Zealand is not facing soaring food prices alone.
Newshub reporters compared the prices of a basic grocery shop around the world and the results are shocking.
Armed with an identical shopping list, AM sent Newshub correspondents from around the globe on a mission to see how prices compare to New Zealand.
The brief was for the reporter to go to a mid-range shop available widely across the country to buy the best brand. Using store cards to get a discount was banned.
The shopping list included 500 grams of standard beef mince, six pack of free-range size 7 eggs, 1 litre of milk, 500 grams of butter, 250 grams of cheese and one loaf of standard white bread.
The grocery hauls were converted to New Zealand dollars and rounded to the nearest dollar.
Interestingly, by quite a lot, the United States was the most expensive at $41. New Zealand was the second most expensive at $34, closely followed by Australia at $33. The United Kingdom was the cheapest at $30.
So, why the variation?
It’s no secret costs vary depending on where you live in the world, but just how much can be startling. The most expensive basic shop was over one-third the price of the cheapest.
Principal Economist at Cognitus Economic Insight Richard Meade told AM co-host Laura Tupou there are several reasons prices vary across countries.
“Part of it is the size of the market, the distribution of customers, how costly it is to set up the infrastructure,” Dr Meade said.
“A country like New Zealand has some obvious challenges because we are a fairly low population. We’re quite spread out, we don’t have very many concentrated cities, so if you want to service the New Zealand economy you actually need to have a certain number of distribution centres around the country.”
Dr Meade said warehousing distribution centres are critical to getting products from thousands of different suppliers to consumers, but they are expensive. He said due to the price a company can only have so many of them which tends to limit how many competitors you can have in any single market.
The strength of the New Zealand dollar also plays a part in the grocery prices we pay.
Dr Meade said when the NZD is strong it helps make it more affordable to obtain overseas goods but on the flip side it affects the return our exporters get which could make it more viable for exporters to divert their goods offshore.
“That might make things like apples and milk more expensive locally.”