NZ food prices fall in May as tomatoes, potatoes get cheaper

New Zealand food prices fell in May, snapping two months of gains, as cheaper tomatoes and potatoes brought down the price of fresh produce.

Food prices fell 0.5% last month and were 0.3% lower than May 2015, Statistics NZ said. The food price index has fallen on a yearly basis in seven of the last eight months, further suppressing broader inflation, which has remained below the Reserve Bank's 1-to-3% target band since December 2014.

The fall in May food prices was led by a 4% drop in vegetable prices while fruit prices were down 0.8%. Cheaper milk, cheese and eggs offset gains in other grocery items, leaving the subgroup unchanged in May while prices for non-alcoholic drinks fell 1.2%. Meat, poultry and fish prices rose 0.2% in May, led by a 5% rise in mutton, lamb and hogget prices, while restaurant meal prices edged up 0.1%.

The food price index accounts for about 19% of the consumers price index, the Reserve Bank's mandated measure, and is typically seen as a barometer of wider inflation. Annual inflation rose at a 0.4% pace in the March quarter, and Statistics NZ will release data for the June quarter on July 18.

Today's data show the decline in annual food prices was led by a 3.5% fall in meat, poultry and fish. Poultry prices were down 10% from May 2015, while pork prices fell 7.2%, mutton, lamb and hogget dropped 5.1%, and preserved, prepared and processed meats were 5.87% cheaper.

Grocery food prices fell 1.8% from a year earlier, with fresh milk 6.4% cheaper and cheese prices down 4.9%. Non-alcoholic beverage prices fell 1.6% in the year, while restaurant meals and ready-to-eat food prices rose 1.7%. Fruit and vegetables were 5.8% more expensive last month from a year earlier as 11-year high prices for avocados drove a 17% jump in fruit prices.

(BusinessDesk)

Paul McBeth
Tue, 14 Jun 2016

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NZ food prices fall in May as tomatoes, potatoes get cheaper