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NZ food prices rise for first month in four, led by groceries, meat

Tuesday 13th December 2011

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New Zealand food prices rose for the first month in four, led by groceries and meat, though the recovery probably isn’t enough to signal inflation is accelerating.

The food price index rose 0.2 percent tin November from October, according to Statistics New Zealand. Food prices rose 1.9 percent from a year earlier in the first month where the impact of last year’s GST hike washed out of the annual comparison.

Grocery prices gained 0.7 percent, providing the biggest contribution to the monthly gain among the five sub-groups. Meat, poultry and fish rose 0.9 percent and non-alcoholic beverages rose 1.3 percent. Prices of fruit and vegetables, typically volatile because of variables such as the weather at harvest, rose 4 percent.

“Increases remain relatively subdued, and the 1.9 percent increase in food prices over the past year is well below the double-digit annual price growth seen over late 2008,” said Christina Leung, economist at ASB. “Overall, there is still breathing space on the inflation front, and we expect the RBNZ will hold off raising the OCR until December 2012.”

Last week Reserve Bank governor Alan Bollard kept the official cash rate at a record low 2.5 percent and said there was little evidence inflation was accelerating.

Today’s data showed restaurant meals and ready-to-eat food prices rose 0.4 percent in the latest month.

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