Brad Olsen: Infometrics Principal Economist on food prices rising by 4.4 percent

Food prices increased 4.4 percent in the 12 months to May 2025, following a 3.7 percent increase in the 12 months to April 2025, according to figures released by Stats NZ.

Higher prices for the grocery food group and the meat, poultry and fish group contributed most to the annual increase in food prices.

Infometrics Principal Economist Brad Olsen unpacks the factors behind this data.

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Episode Transcript

Speaker 1 (00:09):
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Speaker 2 (00:16):
Food prices are up four point four percent in the
year to May. Brad Olson is Informetrics principle economist and
with us now.

Speaker 3 (00:22):
Hey, Brad, good evening.

Speaker 2 (00:24):
So largely driven by dairy, meat, poultry and fish.

Speaker 3 (00:28):
Yes, that's right.

Speaker 4 (00:29):
I mean you've seen those continued cost pressures. You look
at the likes of butter up something like fifty two
percent over the last year. Again, at your beef prices,
your other dairy have all gone up. But that four
point four percent food price inflation over the last year,
that is the fastest now since the end of twenty
twenty three. It's not back to the peak that it was,
but it is starting to make us feel a little

(00:50):
bit more uncomfortable given all of those price changes that
have come through. What is clear looking at some of
the numbers is that there's a few very specific items
like we've just highlighted, that are increasing and they're making
things uncomfortable across the wider shop that people are probably doing.
There's not as much intensity, but there are just some
really quite thorny issues coming through that is prompting people

(01:14):
to ask questions of is their further inflationary pressure to come?

Speaker 3 (01:17):
We thought we'd got rid of it, but perhaps not.

Speaker 2 (01:20):
Do you worry about them? I mean, this is obviously
higher than the band and higher than what we're seeing
across the economies.

Speaker 3 (01:27):
Are you worried about this a little bit?

Speaker 4 (01:30):
And I think it's not just the food prices either.
You look at the likes of energy costs that are
coming forward. Are the likes of electricity up I think
eight point seven percent odd roughly over the last year.
Gas prices for households up a well around fifteen percent
over the last year. All of those become very uncomfortable
and they're pretty vital costs. You can't choose not to

(01:50):
pay them. And so the fact that you've got all
of that, the fact that in the last week you've
seen with this Israel Iran conflict, you know oil prices
are spiking. That's probably going to come through and hit
petrol prices in New Zealand. The fact that you know
the Reserve Bank last time they met, someone on the
committee was a holdout and took it to a vote
and said I don't want to change interest rates because
I'm a bit worried about what's coming forward.

Speaker 3 (02:13):
All of that.

Speaker 4 (02:13):
Suggests that again we're just in the sort of uneasy
position where the economy doesn't feel like it's doing well,
and so on that basis, you'd think that there's further
interest rate cuts to come, but inflationary pressure still too hot,
looking like it's reaccelerating still, and if that's the case,
it makes that interest rate conversation quite difficult.

Speaker 2 (02:31):
Ye, well, I would say bets are on a pause.

Speaker 4 (02:33):
Yet at the moment, I think increasingly likely that you
see a pause in July, and it may well be
an extended pause. They might not cut again. I don't
think we can make that call definitively yet, but even
financial markets have pulled back their expectations. At the end
of last week there was only roughly I think a
sixteen percent chance are of a further interest rate cut

(02:55):
in July. So everyone is sort of taking a breath
and trying to assess what all of this means.

Speaker 2 (02:59):
Now, do you want to explain to us this extremely
early appearance at the gates of Field days.

Speaker 4 (03:06):
I heard that I was sort of taken to ask
over the last week, although you said some lovely things
about me later that evening.

Speaker 2 (03:12):
You kind remember.

Speaker 4 (03:13):
Oh, your answer was sort of giving me all sort
of platitudes, which was.

Speaker 2 (03:17):
We think, we think you are the life of the party.

Speaker 3 (03:21):
I'm glad. I'm glad that other people think of the
life of the party.

Speaker 2 (03:24):
By the way, as a judge, do you do a
good job?

Speaker 3 (03:27):
Well, I'd like to think so.

Speaker 4 (03:29):
I mean, I've done my training and similar But I mean, look,
turning to the field Day's piece, I had some meetings
early on in the morning. Field Day's traffic is absolutely menic,
and I thought, look, if I want to get there
and actually have a you know, be able to get
through my meetings, I'll show up really early.

Speaker 3 (03:43):
I'll get an early park, I'll hid inside, get.

Speaker 4 (03:45):
A coffee, get set up for the six early a Oh,
I think, to be honest, I parked up at about
five fifty eight am.

Speaker 3 (03:52):
I was there real early. Hey, you don't drink a
I don't mean. Look, I an economist. So have you
seen the price of the stuff? Yeah?

Speaker 2 (03:59):
Oh, good from you, Brad.

Speaker 3 (04:01):
I love it.

Speaker 2 (04:01):
You live by your principles. Brad.

Speaker 3 (04:03):
No, you are you.

Speaker 2 (04:04):
I don't know how you have all the energy, but
now I figured it out, brad Elson. Thank you, Infimetrics
principal economists.

Speaker 1 (04:09):
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