NZ food prices rise 0.3% in May, led by expensive fruit and vegetables

Friday 14th June 2013

New Zealand food prices rose for a second month in May, led by more expensive fruit and vegetables.

Prices advanced 0.3 percent in May from April when they gained 0.2 percent, according to Statistics New Zealand. Prices were down 0.1 percent from May last year.

Food prices make up about 19 percent of the consumers price index which will be released for the second quarter on July 16. The Reserve Bank yesterday forecast inflation of 0.3 percent for the quarter, taking annual inflation to 0.8 percent, making it the fourth quarter in a row below the central bank's target of between 1 percent and 3 percent.

The central bank forecasts the annual CPI to return to the band in the third quarter, rising above 2 percent in June 2015, when interest rates are tipped to start increasing as domestic demand spurs inflationary pressures.

"Food price inflation remains subdued and will continue to contribute to weak headline inflation outcomes in the near term," ASB economist Jane Turner said in a note. "The RBNZ has to weigh up low headline inflation now against the expectation of increased inflation pressures in the next few years as the economy gradually recovers."

Prices of fruit and vegetables rose 2.1 percent in May, influenced by higher costs for lettuce and cucumbers. A drop in kiwifruit and mandarin prices partly offset the gains.

Meat, poultry and fish prices rose 0.5 percent from April as less discounting pushed up sausage prices 9.9 percent. Prices for chicken pieces dropped 7.7 percent on more discounting.

Grocery food prices increased 0.1 percent as butter jumped 27 percent, cheese gained 4.7 percent and chocolate advanced 2.8 percent. Non-alcoholic beverage prices fell 0.9 percent as soft drinks weakened 1.2 percent and packaged coffee slipped 4.6 percent.

BusinessDesk.co.nz

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