NZ food prices rise an annual 1%, rental price inflation steady

Monday 13th May 2019

New Zealand food prices rose an annual 1 percent in April as a lift in minimum wage kicked in while a new measure showed that rental price inflation was steady in April.

The 1 percent annual rise in food prices followed a 1.2 percent annual rise in March. Restaurant meals and ready-to-eat food increased 3.2 percent on the year in April and were up 0.9 percent versus March.

Stats NZ said the rise coincided with a $1.20 an hour increase in the minimum wage from April 1.

“Prices for restaurant meals and ready-to-eat food usually increase steadily over time. However, April saw the biggest monthly rise since October 2010,” said consumer prices manager Gael Price.

The grocery food subgroup was up 1.2 percent on the year, pushed higher by the rising costs of eggs. The price of eggs reached a record high of $4.43 a dozen in April 2019, after rising for the past nine months, Stats NZ said.

A national egg shortage may be one of the reasons for the rise in retail egg prices. Industry reports suggest that farmers are switching away from caged hens to more expensive free-range egg production, meaning that egg supply is down as hen flock sizes are reduced.

The prices for both chocolate and ice cream also hit new peaks in April. The average price for a 2-litre tub of ice cream reached a record $6.36 in April versus $5.54 a year earlier.

The increases were partly offset by a 4.1 percent fall in fruit and vegetables on the year.

Food prices fell 0.1 percent in April from March. Vegetable prices fell 2.6 percent and fruit prices fell 2.1 percent, offsetting a 0.9 percent lift in ready-to-eat food and a 0.6 percent rise in milk, cheese, and eggs.

After seasonal adjustment, food prices also fell 0.1 percent on the month.

The food price index accounts for about a fifth of the consumers price index, which the Reserve Bank uses to pursue its inflation target when setting interest rates. The central bank last week cut the official cash rate by 25 basis points to a record low 1.50 percent as it looks to jump start domestic economic growth and ensure inflation hits the midpoint of its 1 percent to 3 percent target range.

Inflation is currently an annual 1.5 percent.

Separately, Stats NZ's new way of measuring rental price inflation was steady in April.

The new measure draws on Ministry of Business, Innovation and Employment tenancy bond data, replacing a quarterly survey of landlords, and will also feed into the CPI.

The 'stock' measure shows rental price changes across the entire renting population, whereas the 'flow' measure only captures dwellings that have a new bond lodged against them.

The national stock rental price index rose 3.4 percent in April from the same month a year earlier. In March it also rose 3.4 percent on the year. It rose 0.3 percent in April from March.

On the flow basis, rental prices rose 4.4 percent on the year in April and 0.1 percent on the month.

(BusinessDesk)

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