Food prices fall 0.1% in November

New Zealand food prices eased on the month in November but remained higher on the year, as poor growing conditions pushed pumpkin and kumara prices to historic highs and butter prices remained at record levels.

The food price index fell 0.1 percent on a seasonally adjusted basis versus the prior month, Statistics New Zealand said. Fruit and vegetables cost 1.2 percent more than they did in October while meat, poultry and fish cost 1.0 percent less. Grocery food prices lifted 0.2 percent on the monthly, with the largest rise in confectionary, nuts and snacks.

Annual food prices rose 2.3 percent, with fruit prices lifting 6.8 percent and vegetable prices increasing 6.3 percent, led by higher prices for pumpkin, kumara and potatoes. According to Stats NZ, both pumpkin and kumara prices reached their highest levels since each series began. Pumpkin prices increased 176 percent on the year to November while kumara prices were up 83 percent.

"Poor growing conditions due to the wet weather early this year had a huge impact on the supply of pumpkin and kumara," consumer prices manager Matthew Haigh said. "Pumpkin prices have reflected lower supply, with dramatic price increases in the last three months, while kumara prices increased more steadily through the year."

Grocery food prices were up 2.4 percent, with higher prices for butter, fresh milk, and cheese. Annual butter prices increased 48 percent to reach another record high, Stats NZ said. The average price of the cheapest available 500-gram block was $5.74 in November 2017, compared with $5.67 in October 2017 and $3.88 in November 2016.

Restaurant meals and ready-to-eat food prices increased 2.4 percent, with ready-to-eat food up 2.3 percent.

Food prices account for about 19 percent of the consumers price index, which is the Reserve Bank's mandated inflation target when setting interest rates. A spike in food prices and a recovery in oil prices earlier this year led to some recent inflationary pressure, although housing-related costs are still the dominant contributor to higher consumer prices. However, while the central bank lifted its forecast inflation at its November monetary policy review it still does not expect to begin lifting rates until June 2019 at the earliest.

(BusinessDesk)