Food prices are likely to rise if war in the Middle East keeps pressure on oil prices – but some types of food may be more affected than others.

Infometrics chief forecaster Gareth Kiernan looked at which sectors might be most exposed by comparing the proportion of their costs devoted to oil-based fuels.

He said the fishing sector was top of the list. It spent about 25% of its input costs on oil-based fuels.

“Diesel for boats, presumably.”

That was followed by horticulture, which spent about 5% of its costs on oil-based fuel.

“Presumably that’s around heating or that kind of thing.”

Next was farming more generally.

“You get down to broader areas of farming, sheep and beef… where you’re talking about 3% to 4% of overall input costs.”

He said fertiliser could be an additional cost that was also exposed to energy price movements.

Supermarkets spent about 10% of their non-wage costs on transport, he said, and meat processing was at a similar level.

Westpac chief economist Kelly Eckhold said food coming from overseas would also be affected.

“The issue is how transportation costs start going through – I guess anything that’s having to come from overseas is going to have a higher transportation component.”

Kiernan agreed.

“Stuff that is having to travel halfway around the world – cocoa beans or coffee or whatever it might be – that is potentially going to be more heavily impacted than stuff we’re producing globally.”

Westpac chief economist Kelly Eckhold.

Eckhold said it could be a couple of months before food price rises started to be seen on New Zealand shelves.

“That’s what we got through Covid… there is a bit of a lead there between movements in global food prices and what we see here, assuming it’s not driven by a local climatic type thing. There’s about a six-month lag. Some of that stuff could be building all through this year.”

Eckhold said it could be the case that more businesses would start to charge a separate fuel surcharge to cover their additional costs.

“I would envisage you could see the introduction of a whole lot of surcharges coming on to things, as people say, ‘Well hey, I’ve got this particular identifiable increased cost,’ and you’ll find that you might end up having to pay an extra $5 or $10 or something like that for anything that’s got a clear transportation component - courier fees and things like that, for example.”

He said he now expected the Consumer Price Index to stay above 3% until the end of the year.

Infometrics’ supplier cost index showed costs to Foodstuffs supermarkets up 2.3% year-on-year in February, before the oil price rise began to be felt.

RNZ