NZ food prices rise at fastest annual pace in six years as vege prices soar

New Zealand food prices rose at their fastest annual pace in more than six years as increasingly expensive vegetables were made more scarce by the wet Autumn weather.

The food price index climbed an annual 3.1 percent in the year ended May 31, the biggest annual increase since September 2011 when prices were artificially boosted by the hike in GST to 15 percent, Statistics New Zealand said. Food prices rose a seasonally adjusted 1.6 percent in May, the biggest monthly increase in at least three years as vegetable prices jumped 11 percent in the month.

"Our wet Autumn has pushed vegetable prices to their highest level in almost six years in May, with the largest annual increase to vegetables on record," consumer prices manager Matthew Haigh said in a statement. "The increase was more pronounced because warmer than usual weather in the 2016 growing season resulted in cheaper than usual vegetable prices in May last year."

The food price index accounts for about 19 percent of the consumers price index, which is the Reserve Bank's mandated inflation target when setting interest rates. Annual inflation rose to 2.2 percent in the first three months of the year, well above the central bank's forecast of 1.5 percent, however Reserve Bank governor Graeme Wheeler looked through that jump in case it was only temporary when keeping the official cash rate unchanged at 1.75 percent last month.

Today's figures show vegetable prices jumped 31 percent in May from the same month a year earlier, with broccoli and kumara prices more than doubling, lettuce prices up 76 percent, and tomatoes rising 34 percent. Stats NZ said the annual increase in vegetable prices was the biggest since the series began. Over the same period, fruit prices fell 5.7 percent.

Meat, poultry and fish prices rose 2.3 percent in May, for an annual increase of 0.6 percent, while grocery food prices were up 1.9 percent in the month and 1.7 percent in the year. Non-alcoholic beverage prices rose 1 percent in May from April, but were 1 percent lower than a year earlier, and restaurant and ready-to-eat meals increased 0.3 percent in the month for an annual gain of 2.1 percent.

(BusinessDesk)