Oily Rag - Eating Your Greens Costs Less

 Read more Oily Rag articles by Frank and Muriel Newman

The good folk at Statistics NZ have been trundling their trolleys in the isles at your local supermarket to see if the things on your grocery list are costing more or less. Usually they find goods cost more, a lot more, but not this time – the check-out till-tape is saying something a little bit different.

The value of goods and services  most consumers buy rose only 1.8% in 2011, compared to 4% for the 2010 year (most of that due to the GST tax increase from 12.5% to 15%). Here are some of the major price changes for the year.

The main decreases (the good news) were in the areas of technology and food:

• Audio-visual equipment (TVs) were down a massive 18%

• Telecommunication costs were down 8.6%, and

• Vegetables were down 8.3% (probably reflecting better growing conditions than a year earlier).

The lower cost of TVs and appliances reflects the stronger Kiwi dollar - which makes imports cheaper (because the importer buys them in overseas currency) - and the tough retail environment, which means retailers have to offer bargains to lubricate the extraction of dollars from consumers with small pockets.

The major increases (the bad news) were:

• Petrol up 11% (higher international oil prices)

• Cigarettes and tobacco up 9.4% (because of higher excise duty)

• Second-hand cars up 5.1%

• Local authority rates increased 4.6%, and

• Renting a house increased 2%.

Lower cost increases are obviously good for consumers and home owners. It will make it harder this year for the likes of local councils, who are always looking for reasons to increase rates, to do so. It is also likely to delay moves by the Reserve Bank to increase interest rates.

The other interesting consumer story to appear recently was an article by a major weekend newspaper that went out to see if it costs more to buy organic products. Their findings confirm the research done by our very own Oily Rag Research Department – that buying organic produce comes at a high price. They found buying organic and ethical brand products adds 26% to the food shopping bill. We found it costs a lot more.

We went shopping and selected eleven everyday items: milk, vegetables, eggs, baked beans, cheese and so on. In one trolley we placed only organic items, and in another we placed the home brand or common equivalent.

The cost of the organic trolley was 90% more! For example, a one litre bottle of organic milk cost $3.60 compared to $2.49 for the regular milk. Organic carrots were $5.98 a kg against $2.47. Organic baked beans were $3.85 for a 420g tin against $1.65.

Clearly, being an organic shopper comes at a high price, but despite this supermarkets are latching on to the trend towards organic produce. Foodstuffs are reported to have said that 15% of egg sales in their supermarkets are free range. (In our sample organic eggs cost 20% more, which was one of the smaller price differences.)

All this raises an interesting debate about whether people are more interested in price, or whether it was organically grown, or has other virtues to make the shopper feel as though they are advancing mankind by making the purchase. We believe that debate is not so important for oily raggers who will be getting most of their own organically grown fruit and vegetables (and eggs) from their own garden and back yard – the only price being a little bit of effort!

Frank and Muriel Newman are the authors of Living off the Smell of an Oily Rag in NZ. If you have a favourite tip then share it with others via www.oilyrag.co.nz or post it to Living off the Smell of an Oily Rag, PO Box 984, Whangarei 0140.

* Frank and Muriel Newman are the authors of Living Off the Smell of an Oily Rag in NZ. Readers can submit their oily rag tips on-line at www.oilyrag.co.nz. The book is available from bookstores and online at www.oilyrag.co.nz.
 

Published 20th Jan 2012

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