Food prices flat in October as rising meat and milk prices offset decline in vegetable

New Zealand food prices were little changed in October, following a fall in September, as rising meat, milk and chocolate prices were offset by falling vegetable prices.

The food price index was unchanged last month, following September's 0.8 percent decline and a 0.3 percent rise in August, according to Statistics New Zealand. The index was 0.9 percent higher than the same month a year earlier. (See graph below)

Food prices make up 19 percent of the broader consumers price index, a measure of inflation complied by the national statistician. A report last month showed New Zealand's inflation was steady in the third quarter of the year, slowing the annual pace of price increases and raising the prospect of interest rates staying lower for longer as the data fell short of expectations.

In October fruit and vegetable prices dropped 3.2 percent, led by a 20 percent drop in tomato prices, while lettuce and cucumber were also cheaper. Non-alcoholic beverage prices slipped 2 percent, with greater discounting on soft drinks, Statistics said.

Grocery food prices rose 1.1 percent, as confectionery, nut and snack prices gained while fresh milk increased 3.2 percent. Meat, poultry and fish rose 1.1 percent, with pork prices climbing 8.7 percent in the month. Restaurant meals and ready-to-eat food prices rose 0.2 percent.

On an annual basis, fruit and vegetable prices rose 2.6 percent, compared to October a year earlier. Meat, poultry and fish was 1.2 percent more expensive than a year ago, with the price of beef and veal rising 4.4 percent. Grocery food slipped 0.2 percent from a year earlier, lead by a 12.3 percent drop in bread prices, while milk, cheese and eggs rose 3.2 percent in the year.

Non-alcoholic beverages rose 0.9 percent from the same period a year earlier, with soft drinks, waters and juice prices unchanged while coffee, tea and other hot drinks rose 5.3 percent. The price of restaurant meals and ready-to-eat foods rose 1.6 percent in the year.

Food price index (monthly) (Source: NZ Stats)

(BusinessDesk)