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Annual food prices inch up 0.5% in June; rental inflation steady

Wednesday 10th July 2019

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New Zealand food prices lifted 0.5 percent in the year to June, bolstered by higher prices for restaurant meals and ready-to-eat food. Rental inflation remained steady. 

The annual rise in food prices followed a 1.7 percent gain in May and a 1 percent increase in April, Stats NZ said. 

Restaurant meals and ready-to-eat food prices climbed 3.4 percent in June from a year earlier, while meat, poultry and fish prices rose 2.8 percent and grocery food prices increased 1.8 percent. 

In the other direction, fruit and vegetable prices fell 8.8 percent from a year earlier. Tomato prices decreased 17 percent, hitting their lowest price ever for a June month. The price of a 200-gram avocado fell to $2.99 in June 2019, 31 percent cheaper than in June last year. 

Food prices fell 0.7 percent during the month, weighed by lower prices for cakes and biscuits, Stats NZ said. After seasonal adjustment the price change remained at 0.7 percent.

“A number of specials on biscuits sent June prices crumbling,” consumer prices manager Gael Price said. Overall, June cake and biscuit prices fell 3.7 percent from May.

Also contributing to lower food prices in June were declines in prices for yoghurt, down 9.1 percent, cheese, down 4.3 percent, and butter, down 1.9 percent. These drops were partly offset by higher prices for chocolate and eggs, Stats NZ said. 

Fruit and vegetable prices fell 2.1 percent on the month and grocery food prices fell 0.7 percent. 

The food price index accounts for about a fifth of the consumers price index, which is one measure the Reserve Bank uses to pursue its inflation target when setting interest rates. 

Rates are currently at a record low 1.50 percent and investors are currently expecting two more 25 basis point rate cuts over the next few months given that annual inflation remains a tepid 1.5 percent. 

Separately, Stats NZ's new measure of rental price inflation remained steady in June. 

It draws on Ministry of Business, Innovation and Employment tenancy bond data, replacing a quarterly survey of landlords, and will also feed into the CPI.

The 'stock' measure shows rental price changes across the entire renting population, whereas the 'flow' measure only captures dwellings that have a new bond lodged against them.

The national stock rental price index for June rose 3.3 percent from the same month a year earlier, following annual increases of 3.4 percent in both April and May. It rose 0.2 percent in June from May. 

On the flow basis, rental prices rose 3.9 percent on the year in June after also lifting 3.9 percent in May. It was down 0.1 percent on the month.  

(BusinessDesk)

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