KEY POINTS:
Food prices increased at a slower rate in April but it is unlikely to be the start of a long-term trend, experts say.
Statistics New Zealand said yesterday that food prices rose 0.3 per cent in April, compared with 0.7 per cent in March. It was the smallest increase in nine months.
Analysts said prices continued to rise because of higher production costs, higher commodity prices and droughts, and pain at the checkout would not end soon.
The latest increase was mainly due to a 1.2 per cent rise in grocery-food prices, driven by yoghurt, up 8.8 per cent, sauces, up 5.1 per cent, potato chips, up 4.6 per cent, and eggs, up 7.6 per cent.
The most significant fall was in the category of non-alcoholic drinks, which were down 2.7 per cent. Within that group, soft drink prices fell 3.2 per cent and fruit juice was down 6.6 per cent.
Statistics New Zealand said the April rise brought the total increase for the past year to 6 per cent. In the other three main categories, restaurant meals and ready-to-eat food prices rose 0.8 per cent and meat, poultry and fish prices rose 0.2 per cent, but fruit and vegetable prices fell 1.4 per cent.
Coriolis Research managing director Tim Morris said the smaller rise could be a side-effect of the New Zealand dollar coming off historic highs, meaning we pay less for imports.
He said competition resulting from rising prices might also be helping: "As a professor of mine once said to me, the best cure for high prices is high prices.
"I think there's been something of a perfect storm recently with increasing global dairy prices, the lag effect [of market conditions], droughts and increasing input prices," Mr Morris said.
But as always, New Zealand was "a small fish in a big ocean" and at the mercy of global market trends.
Donna Purdue, senior economist at Westpac, said there was a large degree of seasonal volatility in the monthly food-price index.
However, she said the full impact of global commodity prices was only just starting to be felt and that would continue to affect dairy and meat prices.
"Broadly, we think there will be more price rises to come," she said.
"The annual rate is still pumping along at 6 per cent, which is the same as March, so the pace of growth hasn't altered."
