Food price rises biggest since GST hike in October 2010
New Zealand food prices last month recorded their biggest gain since goods and services tax was lifted to 15 percent in October 2010, led by a seasonal jump in prices of vegetables such as tomatoes and lettuce.
Prices rose 2.1 percent in June from May, the biggest monthly increase since a 2.2 percent gain in October 2010, according to Statistics New Zealand.
Vegetable prices jumped 18.7 percent and fruit prices rose 6.6 percent, resulting in a 13.4 percent gain in the fruit and vegetable sub-index. All five of the sub-indexes rose.
Food prices make up about 19 percent of the consumers price index which will be released for the second quarter on July 16. Economists expect CPI rose 0.3 percent in the quarter for an annual gain of 0.8 percent, according to a Reuters survey.
That would be down from 0.4 percent and 0.9 percent, respectively, three months earlier.
Food prices rose 0.6 percent in June from the same month of 2012, led by a 4.9 percent increase in fruit and vegetables. Grocery food prices fell 1.5 percent, the only annual decline among the five groups.
"The result adds to other inflation indicators pointing to a subdued inflation environment at the moment," says Christina Leung, economist at ASB, which is forecasting inflation of just 0.1 percent in the second quarter.
"The low-inflation environment is one of the key factors why an OCR increase is not appropriate at the moment, and we continue to expect the RBNZ will wait until March 2014 before lifting the OCR."
The Reserve Bank has kept the official cash rate at 2.5 percent since March 2011.
Prices of meat, poultry and fish rose 1.3 percent last month, led by an 8.5 percent jump in poultry, which the government statistician says was because of less discounting.
Grocery food prices rose 0.1 percent, non-alcoholic drinks gained 1.1 percent and restaurant meals and ready-to-eat food prices gained 0.6 percent.