Food prices fell 0.8 per cent in December, said Statistics New Zealand today.

This follows a 0.6 per cent decrease in November. The main reason behind the fall was the big seasonal fall in vegetable prices, which were down 7.9 per cent in December.

Tomato, lettuce, capsicum, cabbage and broccoli were all down.

"Prices for green vegetables were affected by unseasonal weather in September and October, and prices in November and December 2010 were still well above usual levels," Statistics New Zealand prices manager Chris Pike said.

Grocery food prices fell 0.4 per cent in December, with snack foods contributing to this decrease, falling 4.9 per cent. Milk, cheese, and egg prices decreased 1.1 per cent in December 2010, however, they are still 11.3 per cent higher than a year earlier.

Meat, poultry, and fish prices rose 0.8 per cent in December 2010. This was influenced by price rises for sausages - up 8.7 per cent- and fresh chicken - up 4.2 per cent).

In the year to December 2010, food prices rose 4.2 per cent, which included the 2.2 per cent increase in October, when the rate of GST went up.

ANZ Bank economist Sharon Zoller said that looking through from monthly volatility and seasonal factors, "the key message is that global food prices are trending up."

"Despite a stronger currency, the ANZ commodity price index in NZ dollar terms is sitting around 15 per cent annual growth. This will underpin food prices in New Zealand and abroad this year."

The net impact for the NZ economy was "strongly positive, though household discretionary incomes will be reduced as a result of spending more on groceries."