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NZ food prices dip in December on cheaper vegetables, meat and dairy

Monday 16th January 2017

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New Zealand food prices fell in December, with vegetables, meat and dairy cheaper, although fruit became more expensive in the first official month of summer.

Food prices slipped 0.5 percent in the month on a seasonally adjusted basis, after rising slightly in November and being unchanged in October, Statistics New Zealand said. On an unadjusted basis, food prices dropped 0.8 percent in the month, with December the cheapest month for broccoli, cabbage and cauliflower in the past five years.

Vegetable prices dropped 1.6 percent in the month, while fruit rose 2.6 percent, with the price of oranges up 19.2 percent and citrus fruits up 11 percent overall.

Grocery items, which account for more than a third of food prices, fell 0.9 percent, with yoghurt down 2.6 percent and bread falling 1.2 percent. Meat, poultry and fish prices declined 1.5 percent, while non-alcoholic beverage prices dropped 3.1 percent.

The food price index accounts for about 19 percent of the consumers price index, which is the Reserve Bank's mandated inflation target when setting interest rates. Today's data showed food prices rose 0.6 percent in the year through December, reflecting higher prices for vegetables and dairy. On an annual basis, milk rose 6.1 percent to $3.32 for two litres, while butter rose 34 percent to $4.12 per 500 gram block.

The CPI increased at a 0.4 percent annual pace in the September quarter, the eighth straight quarter below the Reserve Bank's 1-to-3 percent target band. The CPI for the December quarter will be released next week, which the Reserve Bank expects will show inflation returned back within the target band.

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