The Not-So-Subtle COVID Tax

For the fifth consecutive month, food prices have risen. According to Stats NZ, the rise has been driven mainly by higher prices for meat, poultry and fish, as well as restaurant meals and ready-to-eat food.

Kiwi consumers are reporting increased prices for almost all products including fresh produce.

It’s hard not to see a direct link between these increases and the COVID pandemic, with supply chain and staffing issues, as well as natural events affecting crops all adding to the pressure felt by food producers.

Rising food prices can’t help but be passed onto to the consumer. In its monthly food-price index, Statistics NZ showed the price for a battered fish and a scoop of chips has risen 5.3 percent in the past year, to an average $7.75. Burgers have risen at the same rate.

It has been reported that the price of Big Macs has gone up 30c in the past year, contributing to an increased New Zealand cost of living by the measure of The Economist's world-famous global Big Mac Index. The burger with its two 45g beef patties, cheese, gherkins, lettuce and its famous "special sauce" now costs $6.90, averaged across the company's New Zealand restaurants. 

It’s not just fish’n’chips and burgers that have been affected, New Zealand's beloved meat pie is up 4.2 percent to an average $4.70, takeaway pizzas are up 5.0 percent to $15.19, and five pieces of fried chicken are up 3.6 percent to $13.36.

The main causes behind the rise in prices appears to be increases in the cost of beef, coffee, dairy and packaging, plus costs to restaurants like utilities and other supplier costs, and increases in labour costs. The minimum wage rose to $20/hour in April this year, affecting many restaurant chains.

Consumers are already noticing these increases, and for some products, like coffee, price rises have been a long time coming. So should we be transparent with customers and call this increase exactly what it is, a COVID tax? And how should businesses communicate these increases with consumers who are are keen to support the local sector, but who are also feeling the strain on the purse strings?

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