New Zealand food prices rose an annual 1.7 per cent in May, boosted by more expensive groceries and restaurant and ready-to-eat food.

The annual rise in food prices followed a 1 per cent annual rise in April. Restaurant meals and ready-to-eat food prices increased 3.2 per cent in May from a year earlier while grocery food prices increased 1.7 per cent on the year.

The increases were partly offset by a 1.4 per cent fall in fruit and vegetables on the year. Broccoli, potato and cabbage prices all fell in May.

"The cooler weather brought cheaper winter vegetables," consumer prices manager Gael Price said.


Broccoli fell 12 per cent, potatoes fell 3 per cent, and cabbages fell 11 per cent compared with May last year.

Prices for milk, cheese and eggs rose 3.3 per cent from a year earlier, as rising global dairy prices were now reflected in supermarket prices, said Price.

Eggs, both free-range and non-free-range, were up 13.5 per cent versus May last year, as free-range egg suppliers remain under pressure to adjust for an egg shortage. Industry reports suggest that farmers are switching from caged hens to more expensive free-range egg production, meaning that egg supply is down as flock sizes shrink.

Food prices rose 0.7 per cent in May from April. Vegetable prices rose 1.4 per cent and fruit prices were unchanged on the month. The meat, poultry and fish subgroup rose 1.2 per cent versus April while milk, cheese and eggs were up 2.1 per cent.

After seasonal adjustment, food prices rose 0.4 per cent on the month.

The food price index accounts for about a fifth of the consumers price index, which the Reserve Bank uses to pursue its inflation target when setting interest rates. The central bank last month cut the official cash rate by 25 basis points to a record low 1.50 per cent as it looks to jump-start domestic economic growth and ensure inflation hits the midpoint of its 1 per cent to 3 per cent target range.

Inflation is currently an annual 1.5 per cent.

Separately, Stats NZ's new measure of rental price inflation remained steady in May.


It draws on Ministry of Business, Innovation and Employment tenancy bond data, replacing a quarterly survey of landlords, and will also feed into the CPI.

The 'stock' measure shows rental price changes across the entire renting population, whereas the 'flow' measure only captures dwellings that have a new bond lodged against them.

The national stock rental price index for May rose 3.4 per cent from the same month a year earlier. That matched the annual pace of increase in April and March. It rose 0.3 per cent in May from April.

On the flow basis, rental prices rose 3.9 per cent on the year in May after lifting an annual 4.4 per cent in April. It was down 0.2 per cent on the month.