Food prices fall in March, apples weigh

The food price index declined a seasonally adjusted 0.4 per cent last month. Photo / Warren Buckland

New Zealand food prices fell in March as fruit and vegetable prices were weighed down by a sharp fall in the prices of apples and carrots.

The food price index declined a seasonally adjusted 0.4 per cent last month, and was 1.3 per cent higher than in March 2016, Statistics New Zealand said. On an unadjusted basis, food prices fell 0.3 per cent on the month.

Fruit and vegetable prices fellmanufcaturing activity from BizDesk? a seasonally adjusted 2 per cent while grocery food prices, which account for more than a third of the index, rose 0.2 per cent on the month, Statistics NZ said.

"Apple and carrot prices usually fall at this time of the year as we approach the colder months. One kilo of apples cost $2.88 in March compared with $4.40 in February and $5.04 in January," consumer prices acting manager Nicola Growden said.

The rise in grocery food prices was spurred by higher prices for chocolate and cheese, with cheese prices at their highest level since August 2014.

On the year, grocery food prices increased 2.2 per cent, with higher prices for most dairy products. Fresh milk prices increased 6.5 per cent, the largest annual increase since November 2014. Cheese and butter prices also increased, up 11 per cent and 27 per cent, respectively.

Fruit and vegetable prices rose 2.6 per cent while meat, poultry, and fish fell 1.5 per cent mainly due to lower prices for chicken.

The food price index accounts for about 19 per cent of the consumers price index, which is the Reserve Bank's mandated inflation target when setting interest rates. The central bank expects inflation to accelerate to a 1.5 per cent annual pace in the first quarter, having returned to within its 1 per cent-to-3 per cent target band for the first time in two years in the fourth quarter.