Food prices fall in November, milk at seven-year low, beef at all-time high

New Zealand food prices fell in November, as milk maintained last month's slump, while beef prices hit an all-time high.

The food price index slipped 0.2% in November, Statistics New Zealand said. Food prices fell 3.8% on an annual basis.

Grocery food prices, the biggest component of the index, declined 0.1%, after falling 0.8% in October, and are down 3.2% on November 2014. Chocolate biscuits were 9.7% cheaper and the price of white sugar fell 8.2%. Prices for cakes and biscuits decreased 7.7% in the year to November 2015, although Statistics NZ said this was partly offset by higher prices for chocolate and confectionery products.

Fresh milk held at its October level of $3.13 for two litres of blue-top milk, the lowest level since January 2008. Milk is down 15% on November 2014, butter prices have fallen 14% and cheese is 5.9% cheaper.

Low prices for retail dairy products come as global dairy product prices fell to a more than two-month low in the mid-November GlobalDairyTrade auction, weakening for a third consecutive auction, amid an increase in international supply and a subdued outlook.The latest auction, at the beginning of December, saw prices rise though global supply remains strong. In yesterday's Reserve Bank monetary policy statement, the central bank said dairy prices have fallen substantially since 2014, and this is having a large impact on the New Zealand economy.

Meat was more expensive in November, as beef hit an all-time high, having increased 7.2% from last year, and 0.2% since October. Blade and porterhouse steak prices both rose in November, with porterhouse/sirloin steak now costing an average of $28.72 per kilo, while mince fell slightly. Pork rose 4% in November, and mutton, lamb and hogget rose 3.5%. Chicken rose 4.4% for the month, though it is 8.6% cheaper than in November 2014.

Vegetable prices fell 8.5% in November, with cheaper tomatoes, lettuce and broccoli, and actual vegetable prices are down 1.4% for the year. Tomatoes, at $2.84 per kilo, were 50% cheaper compared to October. Fruit prices rose 3%, with kiwifruit, oranges and apples more expensive, and the cost of fruit has risen 7.3% in the last year.

Restaurant meals and ready-to-eat food prices rose 0.1% for the month, and are up 1.9% for the year. Non-alcoholic beverage prices increased 0.6% for the month, and 2.8% for the year, with soft drinks and bottled water more expensive.

Food prices account for about a fifth of the broader consumers price index, which rose 0.3% in the three months ended Sept. 30, below the Reserve Bank's 1% to 3% target range. Meanwhile, the non-tradable component, which covers domestic goods and services, was zero in the quarter, the lowest level since March 2001.

(BusinessDesk)