Food prices up in June, led by seasonal vege spike

Fruit and vegetable increased 2 per cent, with continued record prices for avocados, up 146 per cent. Photo / NZME

New Zealand food prices rose in June, led by seasonal gains for vegetables.

Food prices increased 0.4 per cent in June from May, Statistics New Zealand said. Prices were 0.5 per cent lower than June last year, the agency said.

Vegetable prices led the gains in June, advancing 8.4 per cent from May due to seasonally higher prices as cucumber jumped 72 per cent, capsicum rose 44 per cent, lettuce increased 16 per cent, and tomatoes were up 13 per cent. After adjusting for seasonal variations, food prices fell 0.9 per cent as vegetable prices dropped 6.5 per cent.

The food price index accounts for about 19 per cent of the consumers price index, the Reserve Bank's mandated measure, and is typically seen as a barometer of wider inflation.

Annual inflation rose at a 0.4 per cent pace in the March quarter, and Statistics NZ will release data for the June quarter on July 18.

ASB Bank economist Kim Mundy said the food prices data was softer than expected, prompting it to pull down its forecast for second quarter inflation to 0.5 per cent, below the Reserve Bank's 0.6 per cent forecast.

ASB didn't change its view for interest rates and continues to expect the Reserve Bank to cut in August and November, she said.

Today's data show the decline in annual food prices was led by lower grocery prices which dropped 2.3 per cent.

Dairy product prices weakened, with cheese prices down 9.5 per cent, fresh milk slipping 3.9 per cent and yogurt falling 9.2 per cent. The average price of a kilo of cheddar cheese dropped to $7.68, from $9.12 a year earlier and marking the lowest level since September 2007, the statistics agency said.

Meat, poultry and fish prices dropped 0.9 per cent over the year as chicken fell 5.3 per cent, processed meat slid 2.9 per cent and lamb sank 5.2 per cent. Beef bucked the trend, advancing 4.3 per cent.

Fruit and vegetable prices increased 2 per cent over the year, with continued record high prices for avocados, up 146 per cent, partly offset by lower prices for tomatoes which fell 20 per cent.

Restaurant meals and ready-to-eat food advanced 1.6 percent over the year.

See the full report below: