Take-away costs drive up January food prices

Food prices in January were 0.8 per cent higher than a year earlier, driven by higher meat, grocery and take-away costs.

Higher costs for restaurant meals and ready-to-eat food made the biggest contribution to the increase in Stats NZ's food price index.

Ready-to-eat food prices rose 3.3 per cent in January compared to January 2018. Meanwhile milk, cheese and eggs were 2.9 per cent higher, while restaurant meals cost 2.3 per cent more. Meat, poultry and fish prices were 1.9 per cent higher.

Those increases were partially offset by a 5.8 per cent drop in fruit prices, with fruit and vegetable prices overall down 3.7 per cent. Non-alcoholic drink prices fell 0.9 per cent.

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

On a month-by-month basis, food prices in January rose 1 per cent from December, but were down 0.6 per cent after seasonal adjustment.

Fruit and vegetable prices rose 4.5 per cent, with grocery prices up 0.9 per cent. They were the biggest contributors to the gain. Meat and poultry, and non-alcoholic drink prices also rose.

Consumer prices manager Caroline White attributed the jump in fruit and vegetable prices to a return to more normal harvests after bumper production late last year.

Broccoli prices more than doubled from a seven-year low of $1.25 a head in December, she said. Lettuce prices rose 79 per cent.

Stats NZ noted that milk prices fell to a 19-month low last month.

"Supermarket milk prices are highly influenced by the farmgate milk price," White said.

"Fonterra's forecast milk payout was cut multiple times from May last year. While dairy farmers face tougher times, consumers usually benefit from the lower prices when supermarkets pay less to the suppliers."

Yoghurt prices rose 14 per cent, coming off specials in late 2018. Cheese prices rose 4.6 per cent, and butter prices rose 2.4 per cent.