New Zealand food prices fell in February, led by seasonal declines in fruit and vegetables and lower meat prices.

The food price index slipped 0.7 per cent in February after a 1.3 per cent gain in January, according to Statistics New Zealand. Prices gained 1.5 per cent from February 2014, again led by fruit, vegetables and meat.

Prices for fruit and vegetables fell 2.4 per cent in February, as declines in apples and tomatoes offset higher strawberry prices.

Apple prices fell 23 per cent from a peak in January, when they rose to their highest level on record as adverse weather resulted in a smaller, later crop. Meat prices declined 1.6 per cent, led by falls in lamb, beef and chicken.

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Movements in food prices are closely watched by economists, as they make up 19 per cent of the broader consumers price index, the nation's key inflation measure.

New Zealand inflation last year dropped below the central bank's 1 per cent to 3 per cent target band, rising at a 0.8 per cent annual pace in 2014.

Reserve Bank governor Graeme Wheeler said today any further downward surprises in New Zealand's already tepid pace of consumer inflation may warrant an interest rate cut.

The bank, which today kept its benchmark interest rate on hold at 3.5 per cent, expects inflation to stay below 1 per cent until March next year, before rising to 1.7 per cent by early 2017.

The latest food price data shows grocery foods declined 0.6 per cent in February, with lower prices for snack foods, yoghurt, chocolate and bread, offset by higher prices for sweets.

Prices for non-alcoholic beverages rose 1.1 per cent, reflecting less discounting on energy drinks, soft drinks and packaged coffee, the statistics agency said.


See the full Food Price Index release here: