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 (00:00):
Now food prices are up four point four percent in
the year to May. Brad Olsen is informetrics principle economist and.

Speaker 2 (00:05):
With us now, hey, Brad, good evening.

Speaker 1 (00:07):
So largely driven by dairy, meat, poultry and fish.

Speaker 2 (00:11):
Yes, that's right.

Speaker 3 (00:12):
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, 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.

Speaker 2 (00:30):
It's not back to the peak that it was, but it.

Speaker 3 (00:32):
Is starting to make us feel a little 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
quite as much intensity, but there are just some really

(00:54):
quite thorny issues coming through that is prompting people to
ask questions of is their further inflation pressure to come.

Speaker 2 (01:01):
We thought we'd got rid of it, but perhaps not.

Speaker 1 (01:03):
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 2 (01:11):
Are you worried about this a little bit?

Speaker 3 (01:14):
And I think it's 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 well around fifteen percent over
the last year.

Speaker 2 (01:29):
All of those.

Speaker 3 (01:30):
Become very uncomfortable and they're pretty vital costs. You can't
choose not to 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

(01:51):
a vote and said, I don't want to change interest
rates because I'm a bit worried about what's coming forward.
All of that 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

(02:11):
if that's the case, it makes that interest rate conversation
quite difficult.

Speaker 1 (02:15):
Yeah, well, I would say bets are on a.

Speaker 3 (02:16):
Pause yet at the moment, I think increasingly likely that
you see a pause in July, and it may well
be an extended pause.

Speaker 2 (02:24):
They might not cut again.

Speaker 3 (02:25):
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 of a further interest rate
cut in July. So everyone is sort of taking a
breath and trying to assess what all of this means.

Speaker 1 (02:42):
Now, do you want to explain to us this extremely
early appearance at the gates of Field days.

Speaker 3 (02:49):
I heard that I was sort of taken to task
over the last week, although you said some lovely things
about me later that evening, I remember your answer was
sort of giving me all sort of planes, which was
we think, we think you are the life of the party.

Speaker 2 (03:04):
I'm glad. I'm glad that other people think of the
life of the party.

Speaker 1 (03:07):
By the way, as a judge, do you do a
good job?

Speaker 2 (03:11):
Well, I'd like to think so.

Speaker 3 (03:13):
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 days 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 2 (03:26):
I'll get an early park, I'll hid inside, get.

Speaker 3 (03:28):
A coffee, get set up for the early Oh, I think,
to be honest, I parked up at about five point
fifty eight am.

Speaker 2 (03:35):
I was there real early. Hey, you don't drink a
I don't. I mean, I look on an economist. So
have you seen the price of the stuff? Yeah? Oh,
good from you, Brad. I love it.

Speaker 1 (03:45):
You live by your principles, Brad, No, you are you.
I don't know how you have all the energy, but
now I figured it out. Brad Elson, Thank you, Infametrics
principal economist.

Speaker 2 (03:53):
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