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Data Flash (New Zealand) Food Price Index - April

Data Flash (New Zealand) Food Price Index - April 2000


Key facts

The food price index fell 0.5% mom in April to a level 0.7% lower than April 1999. This followed a 0.1% mom increase in March. The market had expected a rise of 0.4% mom.

The most significant contribution to the fall in April was a 0.8% decline in grocery food prices, driven to a significant extent by a very large fall in the price of potato crisps. Excluding fresh fruit and vegetables, food prices were still down 0.5% in April but were 0.7% higher than a year earlier.

The food price index (FPI) makes up 18% of the CPI regimen.

Comment

The fall in food prices in April was unexpected and appears to reflect greater discounting in the supermarket sector. Although some bounce back can be expected over the coming months, the food price index appears likely to make a smaller contribution to the Q2 CPI movement.

Nonetheless, we have raised our forecast of the Q2 CPI movement to 0.8% from 0.5% previously. This change largely reflects the recently announced rise in tax on tobacco, together with a smaller contribution from last week's 3 cent increase in petrol prices (with a further rise in petrol prices in the offing should current crude oil and NZD weakness be sustained).

Darren Gibbs, Senior Economist, ++64 9 351 1376

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