Fruit, vege prices nudge upwards

Photo / The Listener

An increase in the price of fruit and vegetables in December was the most significant element in a 0.2 per cent rise in the Food Price Index last month, says Statistics New Zealand in a report released today.

Fruit and vegetable prices were up 2.5 per cent, while meat, poultry, and fish prices rose 1.2 per cent.

Non-alcoholic beverages fell 2.5 per cent in December.

Vegetable prices were up, with potatoes and apples up 14 per cent and pumpkin prices soared 75 per cent due to a supply shortage.

Strawberries recorded seasonally lower prices - down 21 per cent for the month. However, they were up 25 per cent on a year earlier.

The rise in meat, poultry, and fish prices reflected less discounting for fresh chicken pieces - up 3.9 per cent- and sausages up 6.2 per cent.

The fall in non-alcoholic beverage prices resulted from lower prices for soft drinks, where prices fell 2.3 per cent, and fruit juice which was down 5.9 per cent.

"Soft drink prices usually fall in December, with more discounting leading up to the Christmas break," said Statistics NZ prices manager Chris Pike.

For the year to December 2011, food prices were up 2.9 per cent, compared with 1.9 per cent for the year to November 2011. Four of the five food subgroups had price increases in the year to December 2011: grocery food -up 3.5 per cent-meat, poultry, and fish up 3.7 per cent, restaurant meals and ready- to- eat food up 2.4 per cent, and non-alcoholic beverages up 4.4 per cent.

The fruit and vegetables subgroup was down 0.9 per cent.

Today's food price index comes as economists believe New Zealand inflation may have stayed relatively benign as a strong kiwi dollar provided a check on imported prices, while food prices weakened, giving the central bank little urgency to raise interest rates.

The Consumers Price Index held at 0.4 per cent in the final three months of 2011, while the annual pace slowed to 2.6 per cent from 4.6 per cent, according to a Reuters survey, as the effect of the hike in goods and services tax in October 2010 rolls out of the numbers.

Fourth-quarter CPI figures are scheduled for release on Thursday, a week before the Reserve Bank releases its latest assessment of interest rates which is widely expected to signal no change from the record low 2.5 per cent official cash rate and no sense of urgency for any hikes. Governor Alan Bollard cited the "unusual degree of uncertainty" to the global outlook and moderate demand at home when he kept rates unchanged last month.

"Inflation indicators suggest the RBNZ has breathing space on the inflation front," said Nick Tuffley, chief economist at ASB, in a note.

"We expect it to remain on hold until the end of this year."

-NZ HERALD ONLINE / BusinessDesk