KEY POINTS:
Food prices rose 2.7 per cent in August, the largest monthly increase in 19 years, Statistics New Zealand (SNZ) said today.
The last time food prices rose at a faster rate was the 3.8 per cent rise in July 1989, when the rate of GST increased from 10 per cent to 12.5 per cent.
A key factor in the August price rise was unusually wet weather which hampered growing conditions for vegetables.
The announcement of the sharp rise in food prices comes hard on the heels of the Reserve Bank today reducing official interest rates by a larger than expected half a percentage point to 7.5 per cent.
Announcing the cut, Reserve Bank Governor Alan Bollard acknowledged headline inflation was headed for around 5 per cent in the current September quarter. But he expected it to trend downwards after that.
The August rise in prices took the annual rate of food price inflation to 10.6 per cent, the largest annual increase since the year to May 1990.
The most significant upward contribution to the monthly increase came from the fruit and vegetables subgroup, which rose 9.6 per cent in August, SNZ said.
Vegetable prices were up 14.5 per cent, driven by a 33.6 per cent rise in prices for lettuce and a 42.8 per cent rise in tomato prices.
Had vegetable prices remained constant at July prices, the Food Price Index would have risen 1.3 per cent last month.
Vegetable prices had increased by a total of 36.4 per cent during the past four months, with growing conditions hampered by unusually wet weather, SNZ said.
Grocery food prices were up 1.9 per cent in August, while the meat, poultry and fish subgroup was up 2.6 per cent.
Within those subgroups, cakes and biscuits were up 8 per cent, fresh milk rose 4.4 per cent, and lamb was up 16.8 per cent, while yoghurt was down 8.9 per cent.
For the year to August, grocery food was up 13.1 per cent, with cheese rising 43.8 per cent, bread up 17.4 per cent, fresh milk up 12.5 per cent, and butter up 87.6 per cent.
Fruit and vegetables rose 19.1 per cent in the year, with lettuces up 145.3 per cent.
- NZPA
