New Zealand food prices fell last month led by cheaper, meat and in-season fruit and vegetables, though milk prices rose to a nine-month high.

The food price index fell 0.3 per cent in February, following a 1.9 per cent a month earlier, in its sixth decline in seven months, according to Statistics New Zealand. Annual food prices decreased 0.1 per cent.

Fruit and vegetable prices fell 1.6 per cent in February, with cheaper apples and grapes, while meat, fish and poultry declined 1.4 per cent, led by discounted porterhouse/sirloin steak and chicken pieces.

Grocery prices were unchanged in the month, though fresh milk prices rose 2.1 per cent to their highest level since May last year. Non-alcoholic beverage prices rose 1.3 per cent while restaurant means and ready-to-eat food prices slipped 0.1 per cent.


Food prices account for almost 19 per cent of the consumer price index, which is sitting below the Reserve Bank's target band at 0.9 per cent.

Central bank governor Graeme Wheeler will review monetary policy tomorrow and is expected to keep the official cash rate at 2.5 per cent, with benign inflation giving him scope to help invigorate the economic recovery facing a drought across the North Island. Still, a bubbling Auckland property market has been cited as a threat to future financial stability.

"Food prices have been subdued over the past year and a key contributor to the subdued headline CPI," ASB economist Jane Turner said in a note. "Over the coming year, we are likely to see the mixed influence of lower beef and lamb prices versus higher dairy prices."

Today's figures showed fruit and vegetable prices were up 6.3 per cent annually, with non-alcoholic drinks rising an annual 0.2 per cent and restaurant meals and read-to-eat food prices up 0.7 per cent.

Meat, poultry and fish prices fell an annual 2.1 per cent, and grocery prices shrank 2.1 per cent in the year.