New Zealand food prices fell in February on a seasonal dip for fruit and vegetables, while more expensive dairy products underpinned an annual gain in prices.
The food price index slipped 1 per cent in February following a 1.2 per cent rise in January, according to Statistics New Zealand. In the year, food prices were up 0.2 per cent, the smallest annual gain in nine months.
The monthly decline was led by a 6.5 per cent drop in vegetable prices and a 5.1 per cent reduction in fruit, as tomato and apple prices weakened. In the year fruit and vegetable prices decreased 5.6 per cent as the cost of avocados, cucumbers and lettuce fell.
Fresh milk rose 0.3 per cent in the month, and was up 6.9 per cent in the year. Annual gains in milk, cheese and eggs of 5.7 per cent made up the bulk of the yearly price increase with cheese up 6.9 per cent and yoghurt rising 2.9 per cent on the year.
In a long signalled move, the Reserve Bank increased the official cash rate by 25 basis points this morning, noting that "inflationary pressures are increasing". Food prices make up almost 19 per cent of the consumer price index, which rose 1.6 per cent in the December quarter from a year earlier. The March CPI figures are scheduled for release next month.
A 9 per cent drop in lamb influenced a 1.9 per cent monthly slip in meat, poultry and fish prices, and an annual decline of 0.2 per cent.
Grocery food prices rose 0.1 per cent in the month, and 1 per cent in the year, as more expensive snack food partly offset the annual Valentine's induced drop in boxed chocolate prices, down 21 per cent.
Non-alcoholic beverage prices rose 0.7 per cent in February, for a 1.7 per cent increase on the year. Restaurant meals and ready-to-eat food prices declined a monthly 0.2 per cent with an annual gain of 1.6 per cent.