CPI up 0.6 pc despite December drop in food prices

11.00 am

The Consumers Price Index (CPI) rose by 0.6 per cent in the December 2001 quarter, following an identical rise in the September quarter.

Statistics New Zealand says the increase in the December quarter reflects higher prices for food, housing and health care, and was partly offset by lower prices for petrol.

Food prices rose 1.5 per cent, driven by price rises in grocery foods (up 2.0 per cent), and meat, fish and poultry (up 4.2 per cent). The most significant individual item contribution to the grocery food price increase came from a 4.8 per cent increase in milk prices. The increase in meat, fish and poultry prices was driven by higher beef prices (up 5.2 per cent in the December quarter). The most significant downward contribution to food prices came from a decrease in fruit and vegetable prices (down 3.5 per cent).

Housing prices rose by 0.5 per cent in the December 2001 quarter, driven by an increase of 0.7 per cent in the purchase and construction of new dwellings.

Personal and health care also made an upward contribution to the overall CPI movement in the December 2001 quarter, increasing by 1.0 per cent. This increase was strongly influenced by a rise of 1.0 per cent in the price of health care, driven by a rise of 2.0 per cent in general practitioners' fees.

The most significant downward contribution to the CPI in the December 2001 quarter came from a fall of 0.6 per cent in transportation prices. This movement was mainly due to lower prices for petrol (down 9.1 per cent). This fall was partly offset by rises in prices for international air travel (up 5.9 per cent) and used cars (up 1.6 per cent). Petrol prices in the December 2001 quarter were 15.4 per cent lower than in the December 2000 quarter.

On an annual basis, the CPI is 1.8 per cent higher than a year earlier.

Food prices fall in December

Food prices fell 0.2 per cent in December 2001 for the first time since March 2001, when a decrease of 0.5 per cent was recorded.

The decrease in December was mainly due to lower prices for fruit and vegetables and for meat, fish and poultry.

Fruit and vegetable prices fell by 1.8 per cent in December 2001, making the largest contribution to the drop in overall food prices. Fruit and vegetable prices have now fallen for three consecutive months. After adjusting for normal seasonal change, significant decreases were recorded for potatoes (down 15.9 per cent) and carrots (down 20.5 per cent). Lettuces rose by 59.1 per cent in December, making the most significant upward contribution to both fruit and vegetable prices and overall food prices.

Meat, fish and poultry prices also fell in December (down 0.3 per cent) and were driven by falls of 3.5 per cent in lamb prices and 1.0 per cent in beef prices. These falls were partially offset by an increase of 1.4 per cent in poultry prices. The December 2001 decrease is the first fall in meat, fish and poultry prices since March 2001.

Grocery food, soft drinks and confectionery prices rose 0.2 per cent in December. Potato crisps made the most significant contribution to the increase this month, with a rise of 4.4 per cent. Biscuit prices also recorded a significant increase, rising by 4.2 per cent in December.

Restaurant meals and ready-to-eat food prices rose by 0.2 per cent in December. This follows increases of 0.7 per cent in November and 0.3 per cent in October 2001.

From December 2000 to December 2001, food prices rose 5.8 per cent. This is down from the larger annual increases of 6.7 per cent in the year to November 2001 and 7.7 per cent in the year to October 2001. Meat, fish and poultry prices are up 12.4 per cent from December 2000 to December 2001 and grocery food, soft drinks and confectionery prices rose 6.2 per cent over the same period. Restaurant meals and ready-to-eat food prices rose by 4.0 per cent in the year to December 2001. These annual increases were slightly offset by a fall in fruit and vegetable prices, which recorded a decrease of 1.3 per cent in the year to December 2001.