NZ food prices fall in November as milk holds at 7-year low, beef prices at all-time high

Friday 11th December 2015

New Zealand food prices fell in November, as milk maintained last month's slump, while beef prices hit an all-time high.

The food price index slipped 0.2 percent in November, Statistics New Zealand said. Food prices fell 3.8 percent on an annual basis.

Grocery food prices, the biggest component of the index, declined 0.1 percent, after falling 0.8 percent in October, and are down 3.2 percent on November 2014. Chocolate biscuits were 9.7 percent cheaper and the price of white sugar fell 8.2 percent. Prices for cakes and biscuits decreased 7.7 percent in the year to November 2015, although Statistics NZ said this was partly offset by higher prices for chocolate and confectionery products.

Fresh milk held at its October level of $3.13 for two litres of blue-top milk, the lowest level since January 2008. Milk is down 15 percent on November 2014, butter prices have fallen 14 percent and cheese is 5.9 percent cheaper.

Low prices for retail dairy products come as global dairy product prices fell to a more than two-month low in the mid-November GlobalDairyTrade auction, weakening for a third consecutive auction, amid an increase in international supply and a subdued outlook. The latest auction, at the beginning of December, saw prices rise though global supply remains strong. In yesterday's Reserve Bank monetary policy statement, the central bank said dairy prices have fallen substantially since 2014, and this is having a large impact on the New Zealand economy.

Meat was more expensive in November, as beef hit an all-time high, having increased 7.2 percent from last year, and 0.2 percent since October. Blade and porterhouse steak prices both rose in November, with porterhouse/sirloin steak now costing an average of $28.72 per kilo, while mince fell slightly. Pork rose 4 percent in November, and mutton, lamb and hogget rose 3.5 percent. Chicken rose 4.4 percent for the month, though it is 8.6 percent cheaper than in November 2014.

Vegetable prices fell 8.5 percent in November, with cheaper tomatoes, lettuce and broccoli, and actual vegetable prices are down 1.4 percent for the year. Tomatoes, at $2.84 per kilo, were 50 percent cheaper compared to October. Fruit prices rose 3 percent, with kiwifruit, oranges and apples more expensive, and the cost of fruit has risen 7.3 percent in the last year.

Restaurant meals and ready to eat food prices rose 0.1 percent for the month, and are up 1.9 percent for the year. Non-alcoholic beverage prices increased 0.6 percent for the month, and 2.8 percent for the year, with soft drinks and bottled water more expensive.

Food prices account for about a fifth of the broader consumers price index, which rose 0.3 percent in the three months ended Sept. 30, below the Reserve Bank's 1 percent to 3 percent target range. Meanwhile, the non-tradable component, which covers domestic goods and services, was zero in the quarter, the lowest level since March 2001.

BusinessDesk.co.nz

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