Stats NZ

Food price index review: 2020

Food price index review: 2020 outlines changes we made to the FPI basket and its weights as a result of reviewing the food price index (FPI). The changes will be implemented in Food price index: July 2020.

Key points

  • No items were added or removed from the FPI basket.
  • The relative importance of the ‘restaurant meals and ready-to-eat food’ subgroup has increased.
  • The relative importance of the ‘fruit and vegetables’ subgroup has decreased. 
  • The relative importance of ‘meat, poultry, and fish’, ‘grocery food’, and ‘non-alcoholic beverages’ in 2020 is roughly the same as it was in 2017.

About the FPI and the FPI basket

The FPI measures the changes in prices that households pay for food. Price change is measured by tracking the prices of individual food items that make up a representative food basket.

We review the FPI every three years as part of a wider consumer price index (CPI) review to ensure the index remains relevant.

The 2020 review has updated the relative importance of the items within the FPI basket.

The FPI basket is organised into five ‘subgroups’, which can be further broken down into 14 ‘classes’, which in turn can be broken down into 63 ‘sections’ (17 of which are publicly available). Each section (for example, ‘beef and veal’) is made up of items that are representative of that section.

We include particular items in the FPI basket to ensure there is good representation across the subgroups, classes, and sections. We select more items for classes and sections where there is a relatively high variation in price change (where the prices of items in the class or section tend to move differently) than for classes and sections with little variation (where prices move similarly).

We made no additions to, or removals from, the FPI basket as part of the 2020 review. The FPI basket continues to contain 162 items.

Information sources on food spending

Our main source of information for the 2020 FPI review was the 2018/19 household economic survey (HES). The survey ran from July 2018 to June 2019, and was completed by about 4,000 households. It collected information on what households spend on food, and other goods and services.

In the HES 2018/19 collection, the diary reporting period changed from two weeks to one week.

Household expenditure statistics: Year ended June 2019 has more information on the HES.

We also used information from food and beverage manufacturers and distributors, supermarket scanner data from the Nielsen Company and data from other Stats NZ surveys (for example, the retail trade survey and the 2018 Census).

Relative importance of different types of food

To show the relative importance of the FPI subgroups, we calculate the proportion of each subgroup based on their share of total household spending on food. For example, for every $100 households spend on food about $15 is spent on meat, poultry, and fish, see figure 1. We estimate this spending using the Household economic survey (HES) and other data sources.

Figure 1

Created with Highcharts 5.0.14Percentages are rounded to sum to 100.Relative importance of food price index subgroups, by expenditure weights, June 2020Grocery food: 34.4%Grocery food: 34.4%Restaurant meals and ready-to-eat food: 27.2%Restaurant meals and ready-to-eat food: 27.2%Meat, poultry, and fish: 15.1%Meat, poultry, and fish: 15.1%Fruit and vegetables: 13.0%Fruit and vegetables: 13.0%Non-alcoholic beverages: 10.3%Non-alcoholic beverages: 10.3%Stats NZ

Relative importance of food price index subgroups, by expenditure weights, June 2020

Created with Highcharts 5.0.14Relative importance of food price index subgroups, by expenditure weights, June 2020Grocery food: 34.4%Grocery food: 34.4%Restaurant meals and ready-to-eat food: 27.2%Restaurant meals and ready-to-eat food: 27.2%Meat, poultry, and fish: 15.1%Meat, poultry, and fish: 15.1%Fruit and vegetables: 13.0%Fruit and vegetables: 13.0%Non-alcoholic beverages: 10.3%Non-alcoholic beverages: 10.3%Grocery foodRestaurant meals and ready-to-eat foodMeat, poultry, and fishFruit and vegetablesNon-alcoholic beveragesStats NZ
SubgroupPercent
Grocery food34.4
Restaurant meals and ready-to-eat food27.2
Meat, poultry, and fish15.1
Fruit and vegetables13
Non-alcoholic beverages10.3

Figure 2 shows the relative importance of the food subgroups at the 2014, 2017, and 2020 FPI reviews. Note that the 2014 and 2020 expenditure weights are set in the June quarters while the 2017 expenditure weights are set in the September quarter due to delays caused by the Kaikoura earthquake. Seasonality may play a role in time-series comparisons.

Figure 2

Created with Highcharts 5.0.14SubgroupPercentDue to rounding, figures don't sum to 100 percent.Food price index expenditure weights by subgroup, June 2014, September 2017, and June 2020201420172020Fruit and vegetablesMeat, poultry, and fishGrocery foodNon-alcoholic beveragesRestaurant meals and ready-to-eat food01020302.557.512.51517.522.52527.532.53537.5Stats NZ

Food price index expenditure weights by subgroup, June 2014, September 2017, and June 2020

Created with Highcharts 5.0.14PercentFood price index expenditure weights by subgroup, June 2014, September 2017, and June 2020201420172020Fruit and vegetablesMeat, poultry, and fishGrocery foodNon-alcoholic beveragesRestaurant meals and ready-to-eat food01020302.557.512.51517.522.52527.532.53537.5Stats NZ
Subgroup201420172020
Fruit and vegetables13.714.8513.03
Meat, poultry, and fish16.1515.0215.06
Grocery food37.0934.4934.43
Non-alcoholic beverages10.210.0910.24
Restaurant meals and ready-to-eat food22.8625.5527.23

Figure 3 shows the relative importance of the FPI classes.

Figure 3

Created with Highcharts 5.0.14ClassPercentDue to rounding, figures don't sum to 100 percent.Food price index expenditure weights by class, June 2020Fruit and vegetablesMeat, poultry, and fishGrocery foodNon-alcoholic beveragesRestaurant meals and ready-to-eat foodFruitVegetablesMeat and poultryFish and other seafoodBread and cerealsMilk, cheese, and eggsOils and fatsFood additives and condimentsConfectionery, nuts, and snacksOther grocery foodCoffee, tea, and other hot drinksSoft drinks, waters, and juicesRestaurant mealsReady-to-eat food0123456789101112131415161718Stats NZ

Food price index expenditure weights by class, June 2020

Created with Highcharts 5.0.14PercentFood price index expenditure weights by class, June 2020Fruit and vegetablesMeat, poultry, and fishGrocery foodNon-alcoholic beveragesRestaurant meals and ready-to-eat foodFruitVegetablesMeat and poultryFish and other seafoodBread and cerealsMilk, cheese, and eggsOils and fatsFood additives and condimentsConfectionery, nuts, and snacksOther grocery foodCoffee, tea, and other hot drinksSoft drinks, waters, and juicesRestaurant mealsReady-to-eat food0123456789101112131415161718Stats NZ
ClassFruit and vegetablesMeat, poultry, and fishGrocery foodNon-alcoholic beveragesRestaurant meals and ready-to-eat food
Fruit4.82
Vegetables8.21
Meat and poultry12.49
Fish and other seafood2.57
Bread and cereals9.53
Milk, cheese, and eggs9.4
Oils and fats1.64
Food additives and condiments2.56
Confectionery, nuts, and snacks8.51
Other grocery food2.8
Coffee, tea, and other hot drinks2.15
Soft drinks, waters, and juices8.1
Restaurant meals9.43
Ready-to-eat food17.8

Figure 4 shows how the relative importance of the FPI classes has changed over the past three FPI reviews.

Figure 4

Created with Highcharts 5.0.14ClassPercentDue to rounding, figures don't sum to 100 percent.Food price index expenditure weights by class, June 2014, September 2017, and June 2020201420172020FruitVegetablesMeat and poultryFish and other seafoodBread and cerealsMilk, cheese, and eggsOils and fatsFood additives and condimentsConfectionery, nuts, and snacksOther grocery foodCoffee, tea, and other hot drinksSoft drinks, waters, and juicesRestaurant mealsReady-to-eat food0123456789101112131415161718Stats NZ

Food price index expenditure weights by class, June 2014, September 2017, and June 2020

Created with Highcharts 5.0.14PercentFood price index expenditure weights by class, June 2014, September 2017, and June 2020201420172020FruitVegetablesMeat and poultryFish and other seafoodBread and cerealsMilk, cheese, and eggsOils and fatsFood additives and condimentsConfectionery, nuts, and snacksOther grocery foodCoffee, tea, and other hot drinksSoft drinks, waters, and juicesRestaurant mealsReady-to-eat food0123456789101112131415161718Stats NZ
Class201420172020
Fruit5.195.414.82
Vegetables8.519.438.21
Meat and poultry13.7112.5312.49
Fish and other seafood2.442.492.57
Bread and cereals10.379.549.53
Milk, cheese, and eggs10.669.339.4
Oils and fats1.821.821.64
Food additives and condiments2.842.472.56
Confectionery, nuts, and snacks8.158.498.51
Other grocery food3.252.832.8
Coffee, tea, and other hot drinks1.932.182.15
Soft drinks, waters, and juices8.277.918.1
Restaurant meals7.38.579.43
Ready-to-eat food15.5616.9817.8

Expenditure weight changes

Total and relative expenditure for the ‘fruit and vegetables’ subgroup decreased. All other FPI subgroups showed growth in total expenditure levels. The subgroups that showed the least expenditure growth lost some of their relative weight shares.

Fruit and vegetables

The ‘fruit and vegetables’ subgroup had a decrease in expenditure of 1.29 percent from September 2017 to June 2020, which led to a relative weight decrease of 1.82 percentage points. Prices for the subgroup dropped 1.61 percent over that time. Fruit and vegetables now make up 13.03 percent of total food expenditure, down from 14.85 percent in September 2017.

The vegetables class was the main driver in the expenditure decrease. Vegetables expenditure decreased by 2.10 percent and its relative weight within the food group dropped from 9.43 percent to 8.21 percent. Prices for vegetables were down 2.97 percent.

Restaurant meals and ready-to-eat food

‘Restaurant meals and ready-to-eat food’ continues to be the biggest growth area of the food subgroups. Expenditure grew 19.87 percent from September 2017 to June 2020, which led to a relative weight increase of 1.68 percentage points. Restaurant meals and ready-to-eat food now makes up 27.23 percent of total food expenditure, up from 25.55 percent in September 2017. Prices for restaurant meals and ready-to-eat food increased 9.46 percent over this period.

At the class level ‘restaurant meals’ had stronger expenditure growth (up 23.86 percent) than ‘ready-to-eat food’ (up 17.86 percent). The relative weight for both classes went up. Restaurant meals increased from 8.57 percent of the food group in September 2017 to 9.43 percent in June 2020 and was driven by both price and quantity increases. Ready-to-eat food increased from 16.98 percent of the food group to 17.80 percent and this was driven primarily by price increases rather than volume increases.

Non-alcoholic beverages

The ‘non-alcoholic beverages’ subgroup had expenditure growth of 14.14 percent from September 2017 to June 2020, with a relative weight increase of 0.15 percentage points. This brings the relative weight for non-alcoholic beverages to 10.24 percent of the total food group. Prices increased 1.65 percent.

Expenditure increases for soft drinks (aerated), energy drinks, and coffee (instant, bags, beans, and essence) all contributed to the expenditure growth for this subgroup.

Grocery food

While the ‘grocery food’ subgroup had expenditure growth of 12.28 percent, it lost some of its relative weight, decreasing from 34.49 percent in September 2017 to 34.43 percent in June 2020. Prices increased 3.31 percent.

Expenditure increased 12.28 percent for the ‘bread and cereals’ class. This was mostly driven by a price increase of 4.85 percent. The relative importance for this class had little change. Crackers, plain biscuits, rice (whole and ground), and breadrolls all contributed to the expenditure increase for grocery food.

‘Milk, cheese, and eggs’ class level expenditure grew 13.27 percent between September 2017 and June 2020. This was mostly price driven, up 6.63 percent. At 9.40 percent, the relative weight for this class is a similar level to September 2017. There were significant expenditure increases for all types of cheese, driven primarily by price increases. Eggs were another item in this class with strong growth.

‘Oils and fats’ class level expenditure had little change, up 0.92 percent. Prices decreased 1.83 percent. Oils and fats lost 0.18 percentage points of its relative weight in the food group, down to 1.64 percent in June 2020.

The ‘food additives and condiments’ class level expenditure movement was up 16.78 percent. Prices are at a similar level to September 2017. The relative importance for this class increased 0.09 percentage points.

‘Confectionery, nuts, and snacks’ showed expenditure growth of 12.63 percent, with prices increasing 1.42 percent. There was little change to the relative weight for this class. Top contributors to expenditure growth were potato crisps, sweets, and chocolate (bars and blocks).

The ‘other grocery food’ class showed an expenditure increase of 11.32 percent. This increase was driven by quantity as prices showed a small decrease of 0.97 percent. The relative weight for ‘other grocery food’ is at a similar level to September 2017.

Meat, poultry, and fish

The ‘meat, poultry, and fish’ subgroup had expenditure growth of 12.78 percent from September 2017 to June 2020. The relative share for this subgroup increased slightly from 15.02 to 15.06 percent. Prices increased 7.41 percent over this period.

Expenditure in the ‘fish and other seafood’ class grew 16.08 percent while expenditure for the ‘meat and poultry’ class grew 12.13 percent. Within the meat and poultry class, ‘mutton, lamb, and hogget’ showed a decline in expenditure between 2017 and 2020, while ‘beef and veal’, ‘pork’, ‘poultry’, and ‘preserved, prepared, and processed meat’ all showed increases in expenditure.

Regional expenditure

We collect FPI prices from 12 regional pricing centres: Whangarei, Auckland, Hamilton, Tauranga, Napier-Hastings, New Plymouth, Palmerston North, Wellington, Nelson, Christchurch, Dunedin, and Invercargill. The 2020 FPI review used regional expenditure weights for the five broad regions (Auckland, Wellington, rest of North Island, Canterbury, and rest of South Island).

Regional expenditure weights ensure that price changes at a regional level are accurately reflected in the national FPI. For example, a price change in Auckland (which has 33.41 percent of the population and an FPI regional expenditure weight of 34.85 percent) would have about three times the effect on the national FPI as Canterbury (which has 12.79 percent of the population and an FPI regional expenditure weight of 13.79 percent).

Figure 5 compares the proportion of food expenditure in each region (2020 FPI weight) with the region’s share of the New Zealand population according to population estimates from Stats NZ.

Figure 5

Created with Highcharts 5.0.14PercentPopulation percentages are rounded to sum to 100.Food price index expenditure weights and population proportions, by broad region, 20202020 FPI weightPopulationAucklandWellingtonRest of North IslandCanterburyRest of South Island010203040Stats NZ

Food price index expenditure weights and population proportions, by broad region, 2020

Created with Highcharts 5.0.14PercentFood price index expenditure weights and population proportions, by broad region, 20202020 FPI weightPopulationAucklandWellingtonRest of North IslandCanterburyRest of South Island010203040Stats NZ
Region2020 FPI weightPopulation
Auckland34.8533.41
Wellington11.9210.73
Rest of North Island29.1832.35
Canterbury13.7912.79
Rest of South Island10.2610.72

The table below shows the proportion of food expenditure on restaurant meals and ready-to-eat food relative to other food in the five broad regions compared with the entire country.

Proportion of restaurant meals and ready-to-eat food, and other food expenditure, in the five broad regions
Broad region Restaurant meals and ready-to-eat food expenditure Other food expenditure
Percent(1) Percent(1)
Auckland 32 68
Wellington 29 71
Rest of North Island 22 78
Canterbury 28 72
Rest of South Island 22 78
New Zealand 27 73

1. Percent of total food spending

 

Source: Stats NZ

 

Close to a third of Auckland households’ food budget was spent on restaurant meals and takeaways, compared with a little over a quarter for New Zealand as a whole.

Possible COVID-19 impacts on FPI and CPI

Expenditure patterns for consumer goods (including food) and services may have changed, to varying degrees, due to COVID-19. We are considering options for how to account for possible changes before our scheduled update of the weights after the next household expenditure survey in 2021/22.

Options include:

  • making adjustments to weights for one or two basket items and/or
  • producing a separate, analytical CPI series, with periodic weight updates for some (around 10) CPI basket items.

In both cases, adjustments would only be considered in situations where:

  • the item has a relatively large weight
  • expenditure patterns are likely to have changed, and
  • we have identified a means of making an informed adjustment to the weights (for example, international air fares and accommodation).

We will publish more information about any adjustment before we release the new weights for the CPI on 23 October 2020.

ISBN 978-1-99-003203-5

Upcoming publications

Consumers price index review: 2020 will be published on 23 October 2020. This will be released alongside the Consumers price index: September 2020.

Household living-costs price indexes review: 2020 will be published on 3 November 2020.

The next review of the FPI basket and weights will be in 2023.

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