Fruit, vege prices fall in competitive market

Photo / Hawkes Bay Today

Competition between the supermarket chains is seen as the cause of yet another fall in fruit and vegetable prices.

The Statistics New Zealand Food Price Index released yesterday shows food prices decreased by 1 per cent in the year to July.

It is the third consecutive annual decrease - a trend not seen in 10 years.

However, prices are continuing to slow down after reaching record highs in August 2008.

Although fruit and vegetable prices were higher in July than in June because the products are slower to grow with less light and sunshine in winter, experts say the annual results show a better picture of overall trends.

Fruit and vegetable prices fell 4.3 per cent in the year to July and are now 7.3 per cent lower than their peak in August 2008.

Lettuce prices fell 28.1 per cent in the year to July 2010 - 37.5 per cent lower than their peak in August 2008.

Tomatoes had the biggest increase (up 24 per cent), a rise also attributed to winter.

Horticulture NZ spokeswoman Leigh Catley said fruit and vegetable prices had been dropping for two years, which was worrying.

"It just means that relative to all the other food groups fruit and vegetables are by far the better value and really, it is a concern for growers that prices are tracking down year-on-year relative to the other groups.

"They [prices] went very, very high, I don't think that anybody disputes that.

"But now that they're slowly redressing, fruit and vegetables are falling faster than everything else.

"Competition between the retailers is increasing and the pressure they're putting on their suppliers is toughening up and fruit and vegetable growers are getting caught in that.

"It means that their returns are the same or lower and their costs have definitely increased in the last two years."

Grocery prices fell 0.7 per cent, with the most significant falls in snack foods (down 9.6 per cent) and bread (down 4.4 per cent).

The items that increased the most were cheddar cheese (up 11.8 per cent) and butter (up 27.2 per cent).

A Fonterra spokeswoman said that because more than 90 per cent of New Zealand's milk was exported, the prices paid here were closely linked to international commodity prices.

COSTS OF EATING

UP
* Restaurant and ready-to-eat: +2.1 per cent
* Milk: +10.8 per cent
* Tomatoes: +24 per cent

DOWN
* Fruit and vegetables: -4.3 per cent
* Meat, poultry and fish: -2.8 per cent
* Grocery food: -0.7 per cent

*Year to July 2010