Food prices fell last month as the cost of bananas dropped to their lowest level in five years, and tomatoes fell back from their peak recorded during July.
Statistic New Zealand's Food Price Index shows food prices fell 1.3 per cent during the month, but were still up 6.6 per cent on the same period last year.
Statistics NZ prices manager Chris Pike said the cost of tomatoes fell 25 per cent in August after soaring to $13 a kilogram in July, while the cost of bananas fell 21 per cent during the month.
Four of the five food subgroups recorded price falls in August 2011. The meat, poultry, and fish subgroup fell 0.9 per cent, while the cost of fresh chicken fell 4.2 per cent due to more discounting than in July.
In August, grocery food prices fell 0.3 per cent, reflecting lower prices for cheese (down 5.4 per cent), cakes and biscuits (down 2.7 per cent), and yoghurt (down 6.2 per cent after peaking in July).
All subgroups had price increases in the year to August 2011: grocery food (up 6.2 per cent), fruit and vegetables (up 13.2 per cent), restaurant meals and ready-to-eat food (up 4.2 per cent), meat, poultry, and fish (up 5.0 per cent), and non-alcoholic beverages (up 6.6 per cent).
ASB economist Christina Leung said the easing in food prices in August added to inflation indicators which suggested the Reserve Bank had some breathing space on the inflation front for now.
"With the volatility in global markets dominating the Reserve Bank's attention for now, we expect they will leave the Official Cash Rate on hold this Thursday.
- NZ HERALD ONLINE