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

Key facts

The food price index rose 0.1% mom in May but was 0.2% lower than in May 1999. This followed a 0.5% mom fall in April. The market had expected a rise of 0.5% mom.

Fruit and vegetable prices fell 2.4% but meat prices rose 1.6%, largely due to an 8% rise in the price of lamb. Grocery prices rose 0.2% mom following last months 0.8% mom fall.

Statistics New Zealand commented that an almost equal number of grocery items went `on special' as `off special` in May. This contrasts with the experience of the past 3 months which saw a higher proportion of items go `on special'.

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

Comment

As a result of poor weather conditions in Queensland, a significant rise in fruit and vegetable prices is expected to be recorded in the month of June. Nonetheless, we expect food prices to make a negative contribution to the overall movement in the CPI during Q2.

At this stage, we expect the CPI to rise 0.8% in Q2. Increases in tobacco and petrol prices are expected to make significant contributions to the overall rise.

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