New Zealand raises welfare payments as fruit and vegetable prices rise

The New Zealand government raised welfare and government support payments as food prices rose.

New data released by Stats NZ on Monday showed the cost of fruits and vegetables grew by 23 per cent in the last year – the biggest jump in a single year in 34 years.

Grocery food prices also rose by 12 per cent, Stats NZ said, driven by increases in the prices of eggs, crisps and cheddar cheese.

The price hike comes as New Zealand grapples with inflationary challenges across the economy in the wake of the novel coronavirus, exacerbated by wet weather and, more recently, massive storms.

“Vegetable growers have experienced exceptionally bad weather during growth for several months now,” said John Murphy, Head of Vegetable New Zealand.

“Months of rain and unpredictable wet weather have affected farmers’ ability to plant and harvest.

“Most of the cartoons were pictures of onions in the drains in Boucicault and on the beaches and drains in Hawke’s Bay, as well as the news that up to 90 percent of Northland’s kumara (sweet potato) production was wiped out by Hurricane Gabriel.”

In response, the government opted for a higher-than-usual annual increase in government payments.

In recent years benefits have been linked to an average rise in wages, but Prime Minister Chris Hipkins said on Monday the government would raise payments by 7.22 per cent this year in line with headline inflation.

“The bread and butter support package that we’re announcing today will help people who are really feeling the blow from the rising cost of living,” he said.

More than 1.4 million New Zealanders including job seekers, pensioners, parents and students will benefit from the increase, which takes effect on April 1.

With inflation and the high cost of living the most important issue for New Zealanders, Hipkins promised a government focused on “bread and butter” issues.

In the past month alone, prices for many of the crops affected by Hurricane Gabriel have gone up — broccoli is up 34 percent, lettuce is up 24 percent and oranges are up 13 percent.

Tomatoes cost more than twice as much as they did a year ago, with avocados and pumpkin costing at least 50 percent more.

The price of eggs rose 11 per cent from January to February — they now cost 47 per cent more than they did in February last year.

Opposition finance spokeswoman Nicola Willis said food price growth was driven by more than “international factors”.

“New farming laws, labor shortages and additional business costs all show in the prices that kiwis now have to pay in the supermarket,” she said.