New Zealand food prices rose for a fourth month in July, led by more expensive vegetables in the middle of winter, and increased at their fastest annual pace since February last year.
The food price index increased 0.5 per cent in July, adding to the 2.1 per cent gain inJune, and is up 0.9 per cent from the same time a year earlier, according to Statistics New Zealand. That is the fastest annual gain since a 1.5 per cent increase in 17 months, over a period where food prices have fallen on an annual basis in 11 of those months. A 6.6 per cent increase in the price of vegetables led food prices higher, with more expensive lettuce and broccoli, and grocery food prices rose 0.5 per cent on dearer muesli bars and cheese. Fresh milk prices fell 0.6 per cent in July and preserved milk prices dropped 3.3 per cent, while the price of cheese increased 4.8 per cent.
"Over 2012 and the first half of 2013, food price declines were a contributing factor toward the weakness in headline inflation," ASB economist Jane Turner said in a note. "These trends are now reversing, with meat and dairy prices likely to remain elevated or increase over the coming year, reflecting developments in global markets."
Food prices account for about 19 per cent of the Consumers Price Index, which showed an annual pace of inflation of 0.7 per cent, the slowest since 1999.
The country's tepid pace of inflation has let the Reserve Bank keep interest rates at record low levels as the regulator seeks to stimulate the economic recovery. BusinessDesk
