Food prices rise at fastest annual pace in six years as vege prices soar

Vegetable prices jumped 31 per cent, with broccoli and kumara prices more than doubling. Photo / 123RF

Food prices rose at their fastest annual pace in more than six years as increasingly expensive vegetables were made more scarce by wet autumn weather.

The food price index climbed an annual 3.1 per cent in the year ended May 31, the biggest annual increase since September 2011 when prices were artificially boosted by the hike in GST to 15 per cent, Statistics New Zealand said. Food prices rose a seasonally adjusted 1.6 per cent in May, the biggest monthly increase in at least three years as vegetable prices jumped 11 per cent in the month.

"Our wet autumn has pushed vegetable prices to their highest level in almost six years in May, with the largest annual increase to vegetables on record," consumer prices manager Matthew Haigh said.

"The increase was more pronounced because warmer than usual weather in the 2016 growing season resulted in cheaper than usual vegetable prices in May last year."

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.

Annual inflation rose to 2.2 per cent in the first three months of the year, well above the central bank's forecast of 1.5 per cent, but Reserve Bank governor Graeme Wheeler looked through that jump in case it was only temporary when keeping the official cash rate unchanged at 1.75 per cent last month.

Today's figures show vegetable prices jumped 31 per cent in May from the same month a year earlier, with broccoli and kumara prices more than doubling, lettuce prices up 76 per cent, and tomatoes rising 34 per cent.

Stats NZ said the annual increase in vegetable prices was the biggest since the series began. Over the same period, fruit prices fell 5.7 per cent.

Meat, poultry and fish prices rose 2.3 per cent in May, for an annual increase of 0.6 per cent, while grocery food prices were up 1.9 per cent in the month and 1.7 per cent in the year. Non-alcoholic beverage prices rose 1 per cent in May from April, but were 1 per cent lower than a year earlier, and restaurant and ready-to-eat meals increased 0.3 per cent in the month for an annual gain of 2.1 per cent.