New Zealand food prices rose in June as the onset of winter
brought on higher prices for out-of-season vegetables.
The food price index rose 1.4 per cent in June, the fastest
monthly pace since the same month a year earlier, and up from
0.6 per cent in May, according to Statistics New Zealand. On
an annual basis, food prices rose 1.2 per cent, lower than
the 1.8 per cent annual increase in May, and are at their
highest level since peaking in July 2011.
The monthly increase was underpinned by an 8.9 per cent rise
in the price of vegetables, driven by seasonally higher
prices of tomatoes, lettuce and cucumbers, and a 9.9 per cent
rise in poultry prices, on reduced discounting, Statistics NZ
The annual gain was driven by an 11 per cent rise in the
price of fresh milk to a record high, and a 2.8 per cent
increase in the price of meat, poultry and fish. Fruit and
vegetable prices were down 2.3 per cent on an annual basis on
cheaper avocadoes and bananas.
The food price index is the final component for economists to
evaluate the pace of inflation ahead of next week's
second-quarter consumers price index data, which is expected
to show an annual increase of about 1.8 per cent. Food prices
are given a weighting of about 19 per cent by Statistics NZ
when assessing broader CPI.
ASB Bank economist Christina Leung said the June food price
rises were "broadly in line with our expectations, with
annual food price inflation moderating to 1.2 per cent - well
below the double-digit rates of annual growth seen in 2008.
The recent decline in global dairy and wheat prices means
that grocery food prices should ease over the coming months."
Leung said she expected the Consumers Price Index data for
the second quarter to be released next Wednesday would show a
0.5 per cent increase in overall consumer prices.
"This is higher than the Reserve Bank's June Monetary Policy
Statement's forecast of a 0.3 per cent increase," said Leung.
"But with both us and markets widely expecting the Reserve
Bank will raise the OCR a fourth time at the 24th July
meeting, any surprise either way is likely to have
implications more for what the Reserve Bank will do beyond
the July move."
Leung said she expected the Reserve Bank would pause after
July and resume in December.
"Over 2015, we expect three further OCR increases for an OCR
peak of 4.5 per cent by the second half of 2015."
Today's figures show grocery food prices, which make up about
38 per cent of all spending on food, rose 0.5 per cent in
June, and were up 1.3 per cent on an annual basis.
Non-alcoholic beverage prices fell 1 per cent in June, and
were up 0.5 per cent on the year, while restaurant meals and
ready-to-eat food prices edged up 0.2 per cent in June and an
annual 2 per cent.