Food prices went up 0.6 per cent last month, says Statistics NZ, with higher vegetable prices accounting for nearly all the growth.
Cold weather hampering growing conditions pushed vegetable prices up 12.3 per cent higher than the same month last year, but were still not as high as the levels
seen in August 2008.
Fruit and vegetable prices rose 3.1 per cent, driven by another big jump in lettuce prices, which more than doubled in June and rose further by 41.6 per cent in July.
Prices for two-thirds of the fresh vegetables tracked in the index rose in July 2009. Grocery food prices rose 0.5 per cent in July 2009, while meat, poultry and fish prices fell 0.7 per cent, coming off a record high in June 2009.
For the year to July, food prices rose 8.4 per cent, with grocery food up 7.8 per cent, meat, poultry and fish up 12.4 per cent and vegetables up 12.2 per cent.
Restaurant meals and ready-to-eat food were up 4 per cent and non-alcoholic drinks were up 7.1 per cent.
The most significant downward contributions came from lower prices for cheddar cheese, which has fallen 15.9 per cent and butter, down 21.6 per cent.
ASB economist Nick Tuffley said the lift in vegetable prices was put down to a winter seasonal effect - Statistics NZ no longer seasonally adjusts food prices, which made them more volatile.
Half of green vegetable prices lifted by 10 per cent or more in July, and the cumulative lift in fruit and vegetable prices over June and July was far larger than over the same months last year.
It was "nearly of the magnitude seen over the whole of last winter after weather disrupted produce growth in July and August," said Tuffley.
Even if vegetable prices were to plunge over the rest of the quarter, food prices over the whole quarter were now likely to rise substantially.
This meant it was now less likely that annual CPI inflation would dip below 1 per cent for the current quarter as the Reserve Bank had recently forecast.
Despite this, Tuffley said he did not see any impact on the Reserve Bank's longer-term inflation outlook he expect the bank to "look through the noise".
"The longer-term inflation outlook remains quite weak, reinforced last week by the marked slowing of wage growth," he said.
NZ HERALD STAFF
