Annual food price rise of 6.8% highest since Oct 2001

By NZPA

Thursday 12th June 2008

Food prices leapt another 1% in May, driving the food price index (FPI) up 6.8% in the year to May, Statistics New Zealand said today.

That was the highest rise since October, 2001 when it jumped 7.7%.

The May increase was mainly due to higher prices for fruit and vegetables (up 3.8%), non-alcoholic beverages (up 2.6%) and grocery food (up 0.5%).

Over the year, grocery prices have jumped 11.8% with fresh milk up 21.5%, cheddar cheese up 59.4%, bread up 13.9% and butter up 80.1%.

Fruit and vegetables were only up 2.5% and meat, poultry and fish were only up 1.8%.

When the FPI jumped at the end of 2001 milk and the meat, poultry and fish subgroup featured prominently (up 13 and 15% respectively) although potatoes jumped 66%.

SNZ has taken issue with a recent New Zealand Herald article which said grocery prices had risen 28% in the year, saying the newspaper had not surveyed enough supermarkets and had not picked "best price" for most items as shoppers tend to do and as SNZ does.

The Reserve Bank has predicted annual inflation will jump from 3.4% to an 18 year high of 4.7%. The FPI makes up nearly 20% of the Consumer Price Index.

Within the fruit and vegetables subgroup, the main contributor to the 3.8% increase during May was vegetable prices which jumped 11.0%, driven in particular by tomatoes (up 25.9%), lettuce (up 34.5%) and broccoli (up 37.3%).

Fruit prices actually fell 6.1%, helped by lower prices for mandarins (down 46.5%) and kiwifruit (down 47.6%).

The rise in prices for the non-alcoholic beverages subgroup mainly came from higher prices for soft drinks (up 2.3%).

The grocery food subgroup, which rose 0.5%, was driven by higher prices for a wide range of goods within this subgroup, and there was no significant individual upward contribution this month.

The most significant downward contribution came from lower prices for yoghurt (down 7.1%).

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