Food Price Index - February 2000 - DBank

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

Food Price Index Fruit & Vegetable Index mom. % ann. % mom. % ann. % Sep-99 0.3 -0.3 -1.4 -11.2

Oct-99 -0.6 -1.2 -6.6 -15.9

Nov-99 +0.5 -0.3 0.0 -13.8

Dec-00 -0.6 -0.5 +2.2 -9.1

Jan-00 +2.4 +1.1 +15.8 -1.1

Feb-00 -1.1 -1.1 -9.5 -17.6 Source: DB Global Markets Research, Statistics NZ

Key facts

The food price index fell 1.1% mom in February to a level 1.1% lower than February 1999. This followed a 2.4% mom increase in January.

The most significant contribution to the fall in February was a 7.8% decline in fruit and vegetable prices, partially reversing a sharp increase in January (sharp movements in tomato prices have been the key contributor to recent food price volatility).

Excluding fresh fruit and vegetables, food prices were unchanged in February and 1% higher than a year earlier.

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

Comment

The 1.1% mom fall in food prices in February was at the lower end of market expectations. However, given that the fall was driven by volatile fruit and vegetable prices, the outturn has little significance for the medium-term inflation outlook.

We continue to forecast a 0.9% increase in the CPI in Q1/2000. A slightly lower figure is possible if fruit and vegetable prices remain below their trend level in March. Nonetheless, given increasingly widespread evidence of inflation pressures, we continue to expect a 50 bp increase in the OCR at the 15 March MPS.

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

This, along with an extensive range of other publications, is available on our web site http://research.gm.db.com

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