Food prices ease 0.1% on month in October on cheaper groceries
New Zealand food prices eased in October as fruit and vegetables came into season and some dairy products were in for heavy discounting at grocery stores.
The food price index fell 0.1 percent on a seasonally adjusted basis versus the prior month, Statistics New Zealand said. Fruit and vegetables cost 1.3 percent less than they did in September on a seasonally adjusted basis, while grocery food prices eased 0.8 percent. A kilogram of tomatoes, for example, was $7.68 in October compared with $10.02 in September.
"Although fruit and vegetable prices have dropped this month, the impact of bad weather earlier in the year continues to cause higher prices compared with this time last year," consumers price index manager Matthew Haigh said.
Grocery food pricing was influenced by more discounting on yoghurt and chocolate, Stats NZ said. Yoghurt prices dropped 9.7 percent in October while confectionary, nuts and snacks fell 1.5 percent.
Meat, poultry, and fish prices rose 0.8 percent on the month in October, influenced by higher prices for beef, up 4 percent, and processed meat, up 2.3 percent. Non-alcoholic beverage prices showed no overall change while restaurant meals and ready-to-eat food prices rose 0.1 percent versus September.
Annual food prices rose 2.7 percent, with fruit and vegetable prices increasing 4.4 percent, while grocery food prices were up 2.8 percent, led by higher prices for most dairy products including butter, fresh milk, and cheese, Stats NZ said.
Milk, cheese, and egg prices increased 5.9 percent in the year to October 2017. This continues a general increase in dairy products in the year, with butter prices up 62 percent annually to the highest level since the series began, Stats NZ said. Butter prices reached a new record high, at $5.67 for the cheapest available 500 gram block, compared with $3.50 in October 2016.
"Dairy products are very widely used inputs in a number of food items," Haigh said. "The effects of price rises flow on to products such as takeaway biscuits, buns, cakes and coffee, and eating out for lunch and dinner, all of which saw increases in the year to October 2017."
Food prices account for about 19 percent of the consumers price index, which is the Reserve Bank's mandated inflation target when setting interest rates. A spike in food prices and a recovery in oil prices earlier this year led to some recent inflationary pressure, although housing-related costs are still the dominant contributor to higher consumer price. However, while the central bank lifted its forecast inflation at its November monetary policy review it still does not expect to begin lifting rates until June 2019 at the earliest.
Meanwhile, Stats NZ said that it was removing luncheon sausage from the basket to measure food price inflation with people spending less on the processed meat. Milkshakes, cottage cheese, alfalfa sprouts, canned corn, taro, and spring onions are also on the way out, making way for olives, fresh herbs, and herbal teas.
Stats NZ updates the food price index basket every three years to reflect what households typically spend on food. The basket has 162 different food items.