NZ food prices inch up in June, led by avocados and soft drinks

Thursday 13th July 2017

New Zealand food prices rose in June, led by higher prices for avocados and soft drinks, although produce prices more broadly pulled back from highs in May.

The food price index climbed an annual 3 percent in the year ended June, Statistics New Zealand said and lifted 0.2 percent on the month.

"Avocado prices tend to peak in the winter before falling in spring as new fruit become available," consumer prices manager Matthew Haigh said. "Prices are back near the record level in June last year."

However, "fruit and vegetable prices eased off somewhat in June, from their highs in May," Haigh said. "Lettuce and broccoli prices were down, but tomato and kumara prices continued to rise. Kumara prices were at their highest-ever level – $8.18 a kilogram." A wet autumn pushed up vegetable prices to high levels in May.

In seasonally adjusted terms, however, the food price index fell 0.3 percent in June versus May.

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. Annual inflation rose to 2.2 percent in the first three months of the year, well above the central bank's forecast of 1.5 percent, however, Reserve Bank governor Graeme Wheeler looked through that jump in case it was only temporary when keeping the official cash rate unchanged at 1.75 percent last month.

Today's figures show fruit and vegetable prices fell 0.4 percent in June versus May, with vegetable prices down 2.1 percent but fruit prices up 2.6 percent. Fruit and vegetable prices gained 9.3 percent from a year earlier. Meat, poultry and fish prices rose 1 percent in June and 1.8 percent on the year, while grocery food prices fell 0.3 percent on the month but were up 2.1 percent in the year.

The annual rise was led by higher prices for dairy products. Butter prices in June surpassed last month’s highest-ever level ($4.80); a 500g block of the cheapest available butter cost $5.05 in June 2017, compared with $3.38 in June 2016, Stats NZ said.

Non-alcoholic beverage prices rose 1.8 percent in June from May but only lifted 0.4 percent on the year while in June restaurant and ready-to-eat meals increased 0.2 percent on the month for an annual gain of 2.2 percent.

(BusinessDesk)

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