NZ food prices rise an annual 1.7% in May, rental inflation steady
By Rebecca Howard
June 14 (BusinessDesk) - New Zealand food prices rose an annual 1.7 percent in May, boosted by more expensive groceries and restaurant and ready-to-eat food.
The annual rise in food prices followed a 1 percent annual rise in April. Restaurant meals and ready-to-eat food prices increased 3.2 percent in May from a year earlier while grocery food prices increased 1.7 percent on the year.
The increases were partly offset by a 1.4 percent fall in fruit and vegetables on the year. Broccoli, potato and cabbage prices all fell in May.
“The cooler weather brought cheaper winter vegetables,” consumer prices manager Gael Price said.
Broccoli fell 12 percent, potatoes fell 3 percent, and cabbages fell 11 percent compared with May last year.
Prices for milk, cheese and eggs rose 3.3 percent from a year earlier, as rising global dairy prices were now reflected in supermarket prices, said Price.
Eggs, both free-range and non-free-range, were up 13.5 percent versus May last year, as free-range egg suppliers remain under pressure to adjust for an egg shortage. Industry reports suggest that farmers are switching from caged hens to more expensive free-range egg production, meaning that egg supply is down as flock sizes shrink.
Food prices rose 0.7 percent in May from April. Vegetable prices rose 1.4 percent and fruit prices were unchanged on the month. The meat, poultry and fish subgroup rose 1.2 percent versus April while milk, cheese and eggs were up 2.1 percent.
After seasonal adjustment, food prices rose 0.4 percent on the month.
The food price index accounts for about a fifth of the consumers price index, which the Reserve Bank uses to pursue its inflation target when setting interest rates. The central bank last month cut the official cash rate by 25 basis points to a record low 1.50 percent as it looks to jump-start domestic economic growth and ensure inflation hits the midpoint of its 1 percent to 3 percent target range.
Inflation is currently an annual 1.5 percent.
Separately, Stats NZ's new measure of rental price inflation remained steady in May.
It draws on Ministry of Business, Innovation and Employment tenancy bond data, replacing a quarterly survey of landlords, and will also feed into the CPI.
The 'stock' measure shows rental price changes across the entire renting population, whereas the 'flow' measure only captures dwellings that have a new bond lodged against them.
The national stock rental price index for May rose 3.4 percent from the same month a year earlier. That matched the annual pace of increase in April and March. It rose 0.3 percent in May from April.
On the flow basis, rental prices rose 3.9 percent on the year in May after lifting an annual 4.4 percent in April. It was down 0.2 percent on the month.