Food prices slide 1.3% in July, on weakness in dairy products

New Zealand annual food prices fell in July, as weaker dairy prices weighed on the grocery segment.

Food prices dropped 1.3 percent in July from the same month a year earlier, the biggest decline in the series this year, Statistics New Zealand said. Prices were down 0.2 percent from June.

Grocery prices dropped 2.9 percent in the year, led by dairy products as cheese fell 11 percent, fresh milk dropped 3.2 percent, yoghurt slid 9.7 percent and butter shed 11 percent. This was partly offset by a 37 percent increase in the price of honey. Dairy product prices have remained low for longer than expected amid a global glut in supply and weak demand.

"The price of cheese has continued to fall in the year to July 2016, to its lowest price since October 2009," said Statistics NZ consumer prices manager Matt Haigh. "The average price of a kilo block of the cheapest available mild cheddar cheese was $7.39 in July 2016, down from $9.07 in July 2015."

The food price index accounts for about 19 percent of the consumers price index, which the Reserve Bank monitors when setting interest rates. Consumer prices rose an annual 0.4 percent in the June quarter, the seventh quarter below the Reserve Bank's 1-to-3 percent target band. Governor Graeme Wheeler today cut the benchmark interest rate to a record low 2 percent and signalled further easing will be required to ensure that future inflation settles near the middle of the target range.

Today's data showed meat, poultry and fish prices dropped 2.1 percent as chicken fell 9.9 percent, and pork shed 5.9 percent. Beef bucked the trend, advancing 4.6 percent.

Fruit and vegetable prices slid 0.9 percent. That was led by a 1.4 percent drop in vegetable prices, influenced by lower prices for tomatoes, kumara and lettuce while fruit prices overall were little changed. Cucumber prices jumped 16 percent to $4.84 for a 300-gram cucumber, the highest price recorded since the series began.

Restaurant meals and ready-to-eat food advanced 1.9 percent, while non-alcoholic beverage prices declined 2.7 percent on lower prices for energy drinks.

(BusinessDesk)

Click the hamburger symbol top right of our homepage to access the Rich List 2016 and other sections.