New Zealand food prices fell in May, snapping two months of gains, as cheaper tomatoes and potatoes brought down the price of fresh produce.
Food prices fell 0.5 percent last month and were 0.3 percent lower than May 2015, Statistics New Zealand said. The food price index has fallen on a yearly basis in seven of the last eight months, further suppressing broader inflation which has remained below the Reserve Bank's 1-to-3 percent target band since December 2014.
The fall in May food prices was led by a 4 percent drop in vegetable prices, while fruit prices were down 0.8 percent. Cheaper milk, cheese and eggs offset gains in other grocery items, leaving the subgroup unchanged in May, while prices for non-alcoholic drinks fell 1.2 percent. Meat, poultry and fish prices rose 0.2 percent in May, led by a 5 percent rise in mutton, lamb and hogget prices, while restaurant meal prices edged up 0.1 percent.
The food price index accounts for about 19 percent 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 percent pace in the March quarter, and Statistics NZ will release data for the June quarter on July 18.
Today's data show the decline in annual food prices was led by a 3.5 percent fall in meat, poultry and fish. Poultry prices were down 10 percent from May 2015, while pork prices fell 7.2 percent, mutton, lamb and hogget dropped 5.1 percent, and preserve, prepared and processed meats were 5.87 percent cheaper.
Grocery food prices fell 1.8 percent from a year earlier with fresh milk 6.4 percent cheaper and cheese prices down 4.9 percent. Non-alcoholic beverage prices fell 1.6 percent in the year, while restaurant meals and ready-to-eat food prices rose 1.7 percent.
Fruit and veges were 5.8 percent more expensive last month from a year earlier as 11-year high prices for avocados drove a 17 percent jump in fruit prices.