Almost static food prices good news for grocery bill

Households should be feeling the benefit of continuing low food prices, complementing the ongoing fall in fuel prices, according to the latest Statistics New Zealand data.

In December last year, food prices rose 0.3%, following a 0.5% fall in November and no overall change in October.

Higher prices for fruit, yoghurt and chicken were partly countered by lower prices for some dairy products, Statistics NZ prices manager Chris Pike said yesterday.

In December, fruit and vegetable prices rose 1.4%, influenced by higher fruit prices which rose 4.2%, mainly influenced by kiwifruit, apple and orange prices.

Lower vegetable prices were influenced by price falls for tomatoes, broccoli and lettuce.

Meat, poultry and fish prices rose 0.9%, with higher prices for chicken (up 2.6%) and processed meat (up 1.6%) being partly offset by lower prices for beef (down 1%).

''Chicken prices are now at their highest level, which is 1.1% higher than their previous peak in December 2013,'' Mr Pike said.

Grocery food prices fell 0.7%, influenced by lower prices for most dairy products.

Price falls for cheese (down 5.1%), and butter (down 10%) were offset by higher prices for yoghurt, he said.

ASB economist Christina Leung said soft commodity prices, in particular dairy and grains, had fallen markedly over the second half of 2014.

''While there has been some recovery in these commodity prices more recently, the earlier price falls are flowing through to lower prices for bread, cereals and some key dairy products such as cheese and butter.''

Meanwhile, the increase in the price of restaurant meals and ready-to-eat foods remained modest, despite the increase in household spending on eating out, she said.

As wage inflation continued to increase, ASB expected it would underpin a rise in the price of restaurant meals and ready-to-eat foods in the coming year.

ASB continued to expect the release of fourth-quarter inflation next week would show a flat outcome for the quarter.

With annual inflation expected to come in below the Reserve Bank's 1% to 3% target band for the year ended December, there was little urgency for the central bank to lift the official cash rate, Ms Leung said.

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