NZ food prices fall in April, on cheaper groceries, fruit and vegetables

Wednesday 13th May 2015

New Zealand food prices fell to a four month low in April after discounting in supermarkets and cheaper fruit and vegetables.

The food price index fell 0.3 percent in April, after a 0.1 percent gain in March, taking the measure to its lowest level since December, according to Statistics New Zealand. On an annual basis food prices were 1 percent higher in April than they were in the same month last year, rising at a slower pace than March's 1.9 percent gain, which was the biggest increase in three years.

The food price index makes up nearly one fifth of the broader consumers price index, which has dropped below the Reserve Bank's 1 percent to 3 percent range, rising at a 0.8 percent annual pace in 2014. Reserve Bank governor Graeme Wheeler has kept the official cash rate on hold at 3.5 percent since September but flagged any further downward surprises in New Zealand's already tepid pace of inflation may warrant an interest rate cut. Traders are now pricing in a 46 percent chance of a rate cut at its next meeting in June.

On a monthly basis, grocery foods, which make up more than a third of the index, dropped 0.9 percent in April, as discounted cakes and biscuits slid 6.3 percent. Milk, cheese and eggs, which makes up part of the grocery measure, fell 0.4 percent led by a 2.2 percent drop in cheese prices. Fruit and vegetable prices fell the most in the month, down 1.2 percent, as seasonally low fruit prices offset a 0.1 percent increase in vegetables.

Meat, poultry and fish prices rose 0.4 percent, with beef prices now at their highest level, Statistics NZ said. Restaurant meals and ready to eat food also increased 0.2 percent, and non-alcoholic beverage prices rose 0.3 percent.

The annual gain was led by a 5.3 percent jump in fruit and vegetable prices, as New Zealanders paid more for lettuce, potatoes and tomatoes, while bananas and strawberry prices also rose. Meat, poultry and fish rose 2 percent, restaurant meals and ready to eat food price increased 1.6 percent and non-alcoholic beverages were up 1.8 percent.

Grocery food prices fell 1.5 percent in April compared to the same month a year earlier, as prices for bread, butter and cheese fell.

BusinessDesk.co.nz

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