NZ food prices fall in November

Fruit and vegetables cost 1.2 per cent more than they did in October while meat. Photo / File

New Zealand food prices eased on the month in November but remained higher on the year, as poor growing conditions pushed pumpkin and kumara prices to historic highs and butter prices remained at record levels.

The food price index fell 0.1 per cent on a seasonally adjusted basis versus the prior month, Statistics New Zealand said. Fruit and vegetables cost 1.2 per cent more than they did in October while meat, poultry and fish cost 1.0 per cent less. Grocery food prices lifted 0.2 per cent on the monthly, with the largest rise in confectionary, nuts and snacks.

Annual food prices rose 2.3 per cent, with fruit prices lifting 6.8 per cent and vegetable prices increasing 6.3 per cent, led by higher prices for pumpkin, kumara and potatoes.

According to Stats NZ, both pumpkin and kumara prices reached their highest levels since each series began. Pumpkin prices increased 176 per cent on the year to November while kumara prices were up 83 per cent.

"Poor growing conditions due to the wet weather early this year had a huge impact on the supply of pumpkin and kumara," consumer prices manager Matthew Haigh said.

"Pumpkin prices have reflected lower supply, with dramatic price increases in the last three months, while kumara prices increased more steadily through the year."

Grocery food prices were up 2.4 per cent, with higher prices for butter, fresh milk, and cheese. Annual butter prices increased 48 per cent to reach another record high, Stats NZ said. The average price of the cheapest available 500-gram block was $5.74 in November 2017, compared with $5.67 in October 2017 and $3.88 in November 2016.

Restaurant meals and ready-to-eat food prices increased 2.4 per cent, with ready-to-eat food up 2.3 per cent.

Food prices account for about 19 per cent of the consumers price index, which is the Reserve Bank's mandated inflation target when setting interest rates.

A spike in food prices and a recovery in oil prices earlier this year led to some recent inflationary pressure, although housing-related costs are still the dominant contributor to higher consumer prices.

However, while the central bank lifted its forecast inflation at its November monetary policy review it still does not expect to begin lifting rates until June 2019 at the earliest.