Food prices this year are likely to be affected by the mixed
influence of lower beef and lamb prices versus higher dairy
prices, ASB economist Jane Turner said yesterday.
The Reserve Bank, which releases its official cash rate
decision this morning, largely looked through price
fluctuations when assessing underlying inflation pressures.
Because inflation was likely to remain subdued over the
coming year, the central bank was expected to keep the OCR on
hold at 2.5% until March next year, she said.
New Zealand food prices fell last month led by cheaper meat
and in-season fruit and vegetables, though milk prices rose
to a nine-month high, Statistics New Zealand figures showed.
The food price index fell 0.3% in February, following a 1.9%
lift a month earlier, in its sixth decline in seven months.
Annual food prices decreased 0.1%.
Ms Turner said, as expected, much of the decrease in February
was because of lower fruit and vegetable prices. However,
fruit and vegetable prices remained elevated relative to
year-ago levels, up 6.3%.
Fruit and vegetable prices fell 1.6% in February, with
cheaper apples and grapes, while meat, fish and poultry
declined 1.4%, led by discounted porterhouse/sirloin steak
and chicken pieces.
Grocery prices were unchanged in the month, though fresh milk
prices rose 2.1% to their highest level since May last year.
Grocery prices were now 2.2% below year-ago levels.
Non-alcoholic beverage prices rose 1.3%, while restaurant
meals and ready-to-eat food prices slipped 0.1%Beef and lamb
prices both fell, which likely reflected the impact of the
current drought, she said.
''There has been an increase in meat supply as stock has been
sent to slaughter early as on-farm feed supplies reduced.
Meat prices are likely to weaken further as dry conditions
continue through March.''
Food prices account for almost 19% of the consumer price
index - the official measure of inflation - which is sitting
below the Reserve Bank's target 1% to 3% band at 0.9%.