New Zealand food prices rose in May as a drop off in the price of meat, poultry and fish was offset by a 16 percent gain in vegetables.
The food price index advanced 0.6 percent in May, matching April's 0.6 percent gain, according to Statistics New Zealand. On an annual basis, food prices have increased every month for the past year with May's annual gain picking up to 1.8 percent from a 1.5 percent advance in April, with all five components gaining. (See graph below)
The monthly increase was spurred by a 6.9 percent jump in fruit and vegetable prices, as vegetable prices climbed 16 percent, offsetting a 3.9 percent drop in fruit prices, largely weighed on by discounted bananas. On an annual basis fruit and veggies are 5.6 percent more expensive than they were a year ago, as broccoli, oranges and tomatoes become more costly, offsetting cheaper capsicums and bananas.
The Reserve Bank is watching the pace of rising consumer prices, of which food prices contribute almost 19 percent, having flagged increased price pressures as a reason behind its shift to tighter monetary policy this year. Yesterday governor Graeme Wheeler hiked interest rates for a third time since March to 3.25 percent to curb inflation, and surprised speculators affirming the track of future hike rates after April's first quarter consumers price index showed a slower-than-expected pace of inflation. Second quarter CPI is due next month.
Meat, poultry and fish prices fell 1.5 percent in May, to be the largest downward contribution in the month, as the beef, pork and poultry all recorded declines, while lamb had a marginal increase. On an annual basis price rose 0.5 percent, meat and poultry prices are now 2.4 percent below their October peak, while beef has come off last month's peak and lamb is 17 percent below its August 2011 peak.
Grocery prices fell 0.1 percent in May, as breakfast cereals dropped 2.5 percent and preserved milk fell 3 percent in the month. In the year prices increased 0.9 percent, as milk cheese and egg prices surged 8 percent, with fresh milk costing 11 percent more than it did last year, to be 1 percent above its previous peak in February 2011, Statistics NZ said.
The price of Restaurant meals and ready-to-eat food edged up 0.1 percent in the month, for an annual gain of 2.1 percent. Non-alcoholic beverages rose 0.2 percent in May, and increased 2.7 percent on a yearly basis.