28 Jun 2017

Comparing apples with apples: NZ prices shock Aussies

6:53 pm on 28 June 2017

A supermarket basket of essentials costs 37 percent more in New Zealand than it does in Australia, and a litre of unleaded petrol costs 43 percent more.

Higher prices for fruit, yoghurt and chicken pushed up food prices in December.

Higher prices for fruit, yoghurt and chicken pushed up food prices in December. Photo: 123rf

Richie Leef, 49, is a member of the 'Kiwis in Aus' Facebook page. Having moved to Sydney's west two years ago, he came home for a visit this week and said he "absolutely" was frustrated by the costs.

"Milk, you know, the basic essentials that your children need for their morning breakfast, butter, I also noticed the meat comparing to Australia is probably twice as much for the value that you get here," he said.

Indeed, buying online a trolley of the same 11 basic goods - bread, butter, cheese, milk, eggs, flour, sugar, weetbix, spaghetti, pasta sauce, and mince - cost $35 in Australia and $49 in New Zealand.

That's choosing the cheapest option each time from Countdown in New Zealand and Woolworths in Australia.

Even the weights were the same, but the cost even after accounting for exchange rates was $13 more in New Zealand.

"My girl went to weigh up four apples and it cost her nearly $7 - you know, like, four apples, I mean, come on," Mr Leef said.

"I told her to put it back."

He said he wanted to move back home, but doubted he could afford to.

Food and Grocery Council spokesperson Brent Webling said it was as simple as economies of scale, with Australia's population's more than five times that of New Zealand.

"They can produce goods for less than we can and that makes a difference at the checkout," Mr Webling said.

"We can also put some of the blame for our high prices on the economic growth in our expanding markets in Asia and the East.

"As the standard of living rises in those countries, our high-quality food exports are in even higher demand and that puts pressure on prices.

Industry publication Supermarket News' publisher Peter Mitchell agreed.

"It's the size of the market, the volume and the distance we are from the suppliers as the majority of stuff is now imported."

However, supermarkets and suppliers in New Zealand were also making reasonable margins, he said.

Countdown's full-year 2016 earnings before interest and tax was more than $300 million.

And as far as petrol, AA petrol price expert Mark Stockdale said it was the same story, plus a lot of tax.

"Over half the pump price is tax, and in Australia they pay substantially less tax than we do.

"Any remaining difference between the two would come down to a difference in margin that the fuel companies earn and in Australia their margins are lower than New Zealand.

"And we think that has a lot to do with the fact that Australia has much larger economies of scale.

He said that may have something to do with competition, but it was mainly economies of scale.

"They can spread their overheads over a much larger volume of fuel sold, because there's a lot more people living in Australia," he said.

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