NZ food prices rise 0.8% in February as summer's end drives up cost of fruit, veges

Monday 13th March 2017

New Zealand food prices rose in February on more expensive fruit and vegetables as the end of summer drove up prices for strawberries and lettuce.

The food price index increased a seasonally adjusted 0.8 percent last month, and was 2.2 percent higher than in February 2016, its biggest annual increase since December 2011, Statistics New Zealand said. On an unadjusted basis, food prices rose 0.2 percent in the month.

Fruit and vegetable prices rose a seasonally adjusted 4.5 percent led by more expensive strawberries and bananas, while apple prices fell from the spike in January when the fruit was in short supply. Grocery food prices, which account for more than a third of the index, rose a seasonally adjusted 0.2 percent in the month, led by higher prices for butter, yoghurt and cheese.

More expensive dairy products drove the annual increase in food prices, with grocery items 2.3 percent higher than February 2016, with fresh milk prices up 6.1 percent, yoghurt up 9.2 percent, cheese rising 6 percent and other milk product prices climbing 6.7 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. The central bank expects inflation to accelerate to a 1.5 percent annual pace in the first quarter, having returned to within its 1 percent-to-3 percent target band for the first time in two years in the fourth quarter.

Prices for meat, poultry and fish products fell 1.5 percent in February and were down 2 percent from a year earlier. Beef and veal prices were the only subgroup to rise on an annual basis, up 1 percent from February 2016, while the glut of chicken in the domestic market pushed prices down 9.6 percent.

Restaurant meals and ready-to-eat food prices rose 0.2 percent in the month for a 2 percent annual increase, while non-alcoholic beverage prices were up 0.1 percent in February and were 1.7 percent higher than the same month a year earlier.

BusinessDesk.co.nz

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