Food prices on the rise again - chocolate, milk and eggs lead the way

Food prices were increasing again in January.

Food price inflation returned in January with Stats NZ reporting monthly food prices increased by 0.9 per cent.

The biggest contributor to this rise was grocery food, driven by prices for boxed chocolates, two-litre milk cartons, and fresh eggs (excluding free-range eggs).

Other items that contributed to the monthly rise included apples and legs of lamb.

“Food prices increased both monthly and annually,” said Stats NZ consumer prices manager James Mitchell.

Food prices also increased 4 per cent in the year ended January 2024, however, that annual change was the lowest reported since November 2021, he said.

At 0.9 per cent, the monthly rise was also the lowest for a January month since at least 2019.

The monthly figure was influenced by a rise in cigarette and tobacco prices after the increase in excise duty.

Cigarette and tobacco prices increased 6.4 per cent in January 2024 compared with December 2023 and increased 10.3 per cent in the year ended January 2024.

Stats NZ began publishing monthly price data for cigarettes and tobacco in November 2023. This data contributes to the quarterly consumers price index (CPI).

Broader Selected Price Index data (which includes rent and transport costs) showed rental prices for new tenancies (the flow measure of rental prices) increased by 2.5 per cent, compared with December 2023. They were up 6.8 per cent compared to a year earlier.

Meanwhile, petrol prices were 9.9 per cent higher year-on-year but fell 1.5 per cent in January compared to December.

Costs for air travel continued to fall sharply. After high-demand pricing around the Christmas break, domestic travel prices fell 12.2 per cent in January but they were also down by 5.2 per cent across the year.

International air travel prices fell even more dramatically - off by 21.6 per cent monthly and by 31.5 per cent across the year.

The new data will be watched closely by the Reserve Bank as it assesses whether further Official Cash Rate hikes are needed to quell inflation. It will deliver its verdict with its monetary Policy Statement on Wednesday, February 28.

ANZ economists, who have forecast another hike in February, noted that overall the data was weaker than expected - due largely to the big fall in airfares.