Food prices fell 0.8 per cent in November for the third consecutive month as vegetable prices continued to drop, Statistics New Zealand said today.

Prices manager Chris Pike said the fall reflected seasonally cheaper vegetables, with tomato, broccoli, and lettuce prices all falling in the past couple of months.

Three of the five food subgroups contributed to the fall in the index: fruit and vegetables - down 4.4 per cent, meat, poultry, and fish - down 1.6 per cent, and grocery food - down 0.2 per cent.

Tomato prices fell 45 per cent in November from the month before. Chicken piece prices fell 11 per cent, broccoli was down 35 per cent and the price of lettuce fell 21 per cent.


Prices rose for apples, chocolate blocks, nectarines, and potatoes.

In the year to November 2012, food prices dropped 0.6 per cent, with grocery food making the main downward contribution - falling 3.6 per cent.

ASB Bank economist Jane Turner said that lower prices over the past year were largely due to dairy price falls.

The price of fresh milk has fallen 9.6 per cent in the past year, while butter has gone down 25 per cent. The price of cheddar cheese has fallen 12 per cent in the past 12 months.

"We expect that dairy prices will stabilise over coming months, and expect prices to lift over 2013 as global prices rise due to the lagged impact of this year's US drought and resulting rise in feed costs," said Turner.

She said food price declines over the past year had been a significant contributor to the moderation in CPI inflation.

Much of this decline was a result of a correction in fruit and vegetable prices (reflecting adverse weather conditions in previous years) and a correction in dairy and meat prices from elevated levels late last year.

"Over the coming year we expect food prices will start to rise again. In particular, we expect gains will be led by an increase in meat and dairy prices. This will be the result of lower global production due to higher feed costs following the US drought," said Turner.

Meat, poultry, and fish prices fell 1.7 per cent, as did non-alcoholic beverages, which were down 0.8 per cent.


The strongest individual upward contributions for the year were from kumara - up 98 per cent, avocados - up 92 per cent, pumpkin - up 108 per cent, and apples - up 20 per cent.

Kumara price hikes were influenced by poor weather conditions in both the planting and harvesting seasons, which affected this year's crop.