Fruit and vege prices fall 9 per cent in last year as food price inflation continues to ease

Fruit and vege prices have helped food price inflation to ease. Photo / 123rf

Fruit and vege prices have fallen 9.3 per cent in the past 12 months driven down by tomatoes, broccoli, and lettuce, new Stats NZ data shows.

Overall food price inflation was just 2.1 per cent for the year to February - the lowest it has been since the year to May 2021. Meat, poultry, and fish prices - increased just 0.2 per cent.

But it was bad news for those who enjoy eating out, with the cost of restaurant meals (and ready-to-eat-food) increasing by 6.7 per cent.

“Going out for a meal or grabbing takeaways was more expensive in February 2024,” said Stats NZ consumer prices manager Will Bell.

Overall supermarket grocery food prices increased 3.9 per cent and non-alcoholic beverage prices - increased 4.3 per cent. However, on a monthly basis (compared to January), groceries, as well as meat, poultry and fish, were down 0.5 per cent.

As well as releasing food price data today, Stats NZ has also released its monthly Selected Price Index, which captures food, accommodation and travel costs.

The combined Selected Price Index (SPI) series offers a monthly read on price changes for around 45 per cent of New Zealand household spending. The full Consumer Price Index (CPI) is just released quarterly.

The SPI data for February showed some hefty rises - on an annual basis - for alcoholic drinks, up 5 per cent and tobacco, up 10.4 per cent.

Petrol prices rose 12 per cent for the year and domestic air travel was also up 7.7 per cent. International travel prices fell 2.8 per cent over the year, but the price of an overseas holiday almost certainly didn’t, due to accommodation costs.

Prices for international accommodation increased 24.5 per cent in the 12 months to February 2024, after a decrease of 6.3 per cent in the 12 months to February 2023.

“The cost of staying at accommodation while abroad is more than 40 per cent more expensive than five years ago,” Bell said.

Despite the topline fall in food prices for the month, ANZ economists warned the new data presented “upside risks” to the Reserve Bank’s headline forecast of inflation forecast of 0.4 per cent (quarter on quarter) for a 3.8 per cent annual rate.

Unlike in recent quarters, risks are broad-based across both the tradables and non-tradables sides of the basket, said ANZ economist Henry Russell.

“We think for the RBNZ’s tradables (and headline) inflation forecast to come to fruition, a plunge in international airfares in March would be required,” he said.

All up though, ANZ didn’t think a small upward CPI surprise in the first quarter would be sufficient to change the RBNZ’s policy assessment, given the underlying trend of disinflation remains, he said.

ASB senior economist Kim Mundy noted that overall prices rose in February, with a fall in food prices more than offset by rises across the other components.

“Our add-up of the monthly CPI series shows a tick up in inflationary pressure over the month, but the general cooling trajectory remains intact.  Cooling inflation pressures are consistent with a RBNZ in watch and wait mode,” she said.

Westpac economists went one step further, actually revising up their forecast for first-quarter inflation to 0.8 per cent (previously forecast 0.7 per cent).

That would see the annual inflation rate dropping to 4.2 per cent, down from 4.7 per cent at the end of 2023.