NZ food prices fall in February on cheaper fruit, veges, dairy helps drive annual gain

New Zealand food prices fell in February on a seasonal dip for fruit and vegetables, while more expensive dairy products underpinned an annual gain in prices.

The food price index slipped 1 percent in February following a 1.2 percent rise in January, according to Statistics New Zealand. In the year, food prices were up 0.2 percent, the smallest annual gain in nine months.

The monthly decline was led by a 6.5 percent drop in vegetable prices and a 5.1 percent reduction in fruit, as tomato and apple prices weakened. In the year fruit and vegetable prices decreased 5.6 percent as the cost of avocados, cucumbers and lettuce fell.

Fresh milk rose 0.3 percent in the month, and was up 6.9 percent in the year. Annual gains in milk, cheese and eggs of 5.7 percent made up the bulk of the yearly price increase with cheese up 6.9 percent and yoghurt rising 2.9 percent on the year.

In a long signalled move, the Reserve Bank increased the official cash rate by 25 basis points this morning, noting that “inflationary pressures are increasing”. Food prices make up almost 19 percent of the consumer price index, which rose 1.6 percent in the December quarter from a year earlier. The March CPI figures are scheduled for release next month.

A 9 percent drop in lamb influenced a 1.9 percent monthly slip in meat, poultry and fish prices, and an annual decline of 0.2 percent.

Grocery food prices rose 0.1 percent in the month, and 1 percent in the year, as more expensive snack food partly offset the annual Valentine’s induced drop in boxed chocolate prices, down 21 percent.

Non-alcoholic beverage prices rose 0.7 percent in February, for a 1.7 percent increase on the year. Restaurant meals and ready-to-eat food prices declined a monthly 0.2 percent with an annual gain of 1.6 percent.