Food prices fall in November, led by cheaper spring time veggies

New Zealand food prices fell in November, following no change in October, led by cheaper spring time vegetables and cheese prices.

The food price index slipped 0.5 percent last month, following no change in October and September 0.8 percent decline, according to Statistics New Zealand. The index was 0.6 percent higher than November 2013. Food prices make up 19 percent of the broader consumers price index (CPI), a measure of inflation compiled by the national statistician. (See graph below)

The Reserve Bank today kept interest rates on hold as inflation data comes in lower than expected. The central bank flagged tame expectations for increases in New Zealand's CPI could still be too high, and is reviewing the way it assesses non-tradable inflation, which has undershot its estimates. Food prices sit in the tradable component of inflation.

Today's data shows prices for all but one of the five food groups fell in November, with fruit and vegetable prices dropping 3 percent, led by a seasonal 6.4 percent drop in vegetable prices. Prices for tomatoes plunged 52 percent in the month, adding to October's 20 percent drop. Fruit prices rose, led by higher prices for apples and nectarines, Statistics NZ said.

Grocery food prices, the largest contributor to the index, fell 0.3 percent on cheaper bread, cheese and confectionary, while fresh milk prices rose 1 percent. Meat, poultry and fish prices declined 0.3 percent, as cheaper fish and seafood offset a rise in beef and processed meat prices. Non-alcoholic beverages fell 0.2 percent. Restaurant and ready-to-eat foods increased 0.2 percent.

On an annual basis, fruit and vegetable prices rose 0.7 percent compared to November a year earlier. Meat, poultry and fish prices rose 3 percent, driven by a 6.8 percent gain in beef prices and a 3.2 percent rise in chicken. Grocery food prices fell 0.8 percent in the year, as supermarket discounting led to a 13 percent drop in the price of bread. Cheese, yoghurt and butter prices also decreased. This offset a 7.6 percent annual gain in fresh milk prices, which are at their highest level, said Statistics New Zealand.

Non-alcoholic beverage prices fell 0.8 percent. Restaurant and ready-to-eat foods increased 1.9 percent on an annual basis.

(BusinessDesk)