Consumers face steeper meat prices

Published: Thu 10 Oct 2019 03:34 PM
Consumers face steeper meat prices as African Swine Fever bites
New Zealand consumers are getting squeezed as Chinese buyers scour the world for animal protein, pushing up prices after African Swine Fever decimated Asia's pork industry.
China’s pig herd has shrunk by about a third since the first outbreak of the disease was reported in mid-2018. Global meat prices have soared in response with the Wall Street Journal reporting that retail prices for chicken breasts, thighs and legs have increased roughly 16 percent in Brazil. Europeans are on average paying 5 percent more for pork and Australians are paying 14 percent more for lamb.
Statistics New Zealand figures today show the nation's September food prices lifted 2.2 percent from a year earlier. That was largely due to meat, poultry and fish prices rising 5.3 percent, with a number of cuts and meats notching up records in recent months.
About 85 percent of New Zealand's red meat is exported, meaning domestic prices are linked to the global market.
“The bulk of our meat is exported so yes, the export price does underpin the price New Zealand consumers have to pay for beef as well,” said ANZ agriculture economist Susan Kilsby.
“In countries that have larger domestic markets, export prices have a lesser bearing on what their local consumers have to pay, but here in NZ we have to pay international rates to secure domestic supply,” she said.
According to Stats NZ, the weighted average price of lamb chops, blade steak, and bacon all reached record highs in September. "This follows previous records for bacon in August, lamb chops in July, and blade steak in June and July.”
In relation to exports, ANZ's Kilsby said China has now become New Zealand’s largest trading partner for beef, reducing reliance on the United States. Manufacturing grade imported bull and cow meat is trading at record prices in the US and prices have remained strong throughout the winter months as US buyers have had to compete with demand from Chinese buyers, she said.
“This is not a situation which the US buyers are used to, as traditionally they have been the dominant buyers,” she said.
China’s appetite for lamb and mutton also remains strong as they look for alternative protein sources to fill the void in domestic pork production, she said.
The September lift in New Zealand food prices was also influenced by increasing prices for restaurant meals and ready-to-eat food, up 3.3 percent.
“Rising prices for takeaway foods, like pizza, which is up 5.8 percent, contributed to the overall annual food price increase in the year ended September," Stats NZ's Johnson said.
Food prices were unchanged from August.
The food price index accounts for about a fifth of the consumers price index, which is one measure the Reserve Bank uses to pursue its inflation target when setting interest rates.
The central bank is mandated with keeping inflation between 1 and 3 percent with a focus on the midpoint. Annual inflation is currently running at 1.7 percent. The bank is widely expected to cut rates by a further 25 basis points in November to a record low 0.75 percent.
Separately, Stats NZ's new measure of rental price inflation remained steady in September.
It draws on Ministry of Business, Innovation and Employment tenancy bond data, replacing a quarterly survey of landlords. It also feeds into the CPI.
The 'stock' measure shows rental price changes across the entire renting population, whereas the 'flow' measure only captures dwellings that have a new bond lodged against them.
The national stock rental price index for September rose 3.4 percent from the same month a year earlier, following an annual increase of 3.4 percent in August. It rose 0.2 percent in September from August.
On the flow basis, rental prices rose 4.1 percent on the year in September after lifting 4.3 percent in August. It was up 0.3 percent on the month.
Independent, Trustworthy New Zealand Business News
The Wellington-based BusinessDesk team provides a daily news feed for a serious business audience.
Contact BusinessDesk

Next in Business, Science, and Tech

Contact delivers for customers, employees and shareholders
By: Contact Energy
OceanaGold Announces Receipt Of WKP Mining Permit
By: OceanaGold
COVID-19 lockdown has widespread effects on labour market
By: Statistics New Zealand
New Research By NZ Post Shows Online Shopping Grew 105% In Alert Level 3
By: New Zealand Post
Westpac NZ Lowers Merchant Fees For Small Businesses
By: Westpac New Zealand
Million Dollar Plus Property Sales Increase 11.7% Nationally, Says REINZ
Ice-olation For Antarctica New Zealand
By: Antarctica New Zealand
July House Price Index illustrates market resilience
By: QV Valuations
Queenstown Rents Experience Biggest Drop In Seven Years
By: Trade Me Property
The Quiet Earth
By: Auckland University
James Shaw says Kiwibank, not ministers should decide on investors
Kiwis Confident Financial Markets Will Recover From COVID-19, Plan To Increase Investments
By: Financial Markets Authority
Warehouse Using Covid For Cover As Extensive Restructure Makes Everyone Worse Off
By: FIRST Union
Stronger Green Voice Needed Next Term To Stop More Mining On Or Under Conservation Land
By: Green Party
Unemployment Figures Don’t Tell The Full Story
By: New Zealand National Party
View as: DESKTOP | MOBILE © Scoop Media