New Zealand households face mounting financial pressure as food prices recorded their sharpest monthly increase in over two years.
This food price hike potentially reduces household disposable incomes, as Stats NZ reported food prices jumped 1.9% in January 2025, the largest monthly rise since July 2022, with 65% of items in the food basket becoming more expensive.
Notably, 20% of items saw price increases of 5% or more – the highest proportion in five years.
"The proportion of the food basket that increased by over 5% in price was the highest in five years," Stats NZ prices spokesperson Nicola Growden said.
Essential items saw significant increases, with a two-liter bottle of milk now costing $4.54, up from $3.93 a year ago, while a 250g chocolate block rose to $5.72 from $4.90.
The price surge extends beyond groceries, with fruit and vegetables up 2.8% and alcoholic beverages and tobacco increasing 2.4% following new excise taxes.
This price hike indicates cost-of-living squeeze, which comes as insurance companies report growing concerns about coverage affordability, with the Financial Services Council (FSC) of New Zealand warning about the nation’s underinsurance issue.
Sharing insights in an FSC report months ago, FSC chief executive Kirk Hope stated that despite green shoots in the economy, the cost-of-living crisis is affecting decisions around life and health insurance, with affordability proving to be a barrier for many.
This trend could force households to make choices between essential expenses and insurance protection.
The data shows a trend in seasonal items as well, with out-of-season produce like broccoli, kiwifruit, and apples reporting price increases in January.
While seasonal adjustments show a 0.6% decrease in fruit and vegetable prices, the overall upward pressure on household budgets remains significant.
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