NZ food prices fall in April, on cheaper groceries, fruit and vegetables

Today's data show fruit and vegetable prices were down 2.6 percent in February from a month earlier, and 1.4 percent lower on an annual basis. Photo / NZME.

New Zealand food prices fell to a four-month low in April after discounting in supermarkets and cheaper fruit and vegetables.

The food price index fell 0.3 percent in April, after a 0.1 per cent gain in March, taking the measure to its lowest level since December, according to Statistics New Zealand.

On an annual basis food prices were 1 per cent higher in April than they were in the same month last year, rising at a slower pace than March's 1.9 per cent gain, which was the biggest increase in three years.

The food price index makes up nearly one fifth of the broader consumers price index, which has dropped below the Reserve Bank's 1 percent to 3 percent range, rising at a 0.8 percent annual pace in 2014.

Reserve Bank governor Graeme Wheeler has kept the official cash rate on hold at 3.5 per cent since September but flagged any further downward surprises in New Zealand's already tepid pace of inflation may warrant an interest rate cut.

Traders are now pricing in a 46 per cent chance of a rate cut at its next meeting in June.

On a monthly basis grocery foods, which make up more than a third of the index, dropped 0.9 per cent in April, as discounted cakes and biscuits slid 6.3 per cent.

Milk, cheese and eggs, which makes up part of the grocery measure, fell 0.4 per cent led by a 2.2 per cent drop in cheese prices.

Fruit and vegetable prices fell the most in the month, down 1.2 per cent, as seasonally low fruit prices offset a 0.1 per cent increase in vegetables.

Meat, poultry and fish prices rose 0.4 per cent, with beef prices now at their highest level, Statistics NZ said. Restaurant meals and ready-to-eat food also increased 0.2 per cent, and non-alcoholic beverage prices rose 0.3 per cent.

The annual gain was led by a 5.3 per cent jump in fruit and vegetable prices, as New Zealanders paid more for lettuce, potatoes and tomatoes, while bananas and strawberry prices also rose.

Meat, poultry and fish rose 2 per cent, restaurant meals and ready-to-eat food price increased 1.6 per cent and non-alcoholic beverages were up 1.8 per cent.

Grocery food prices fell 1.5 per cent in April compared to the same month a year earlier, as prices for bread, butter and cheese fell.

See the latest food price index here: