Upward food price trend continues

By Phil Boeyen, ShareChat Business News Editor

Tuesday 13th November 2001

The price of food continues to rise although the rate has slowed thanks to cheaper fruit and vegetables.

Latest figures show food prices rose 0.2% in October compared with the previous month. In September the rise was 1.8% and in August 0.5%. It is the seventh month in a row that food prices have gone up.

Statistics New Zealand says the most significant upward contributions to grocery prices in September, and to the total Food Price Index, came from increases in the price of soft drinks, up 3.8%, and fruit juice, up 7.4%.

Meat, fish and poultry prices rose 0.8% in October 2001, following two larger increases of 2.8% and 2.2% in September and August respectively.

Restaurant meals and ready-to-eat food prices rose by 0.3% in October while fruit and vegetable prices fell by 2%, after adjusting for normal seasonal change.

Cheaper oranges and strawberries helped to lower the fruit and vegetable category although carrots and grapes were more expensive.

The latest figures put the annual increase in food prices, from October 2000 to October 2001, at 7.7%.

"The latest annual increase was influenced by some large price rises over the past year. Meat, fish and poultry prices have risen strongly, up 15% from October 2000, as have fruit and vegetable prices, up 11% over the year," says Statistics NZ.

Deutsche Bank says the Food Price Index is the last piece of domestic data prior to tomorrow's RBNZ monetary policy statement and official cash rate review.

The bank says the market expectation had been for a flat outcome rather than an increase but it is still picking an interest rate cut on Wednesday of 50 basis points to take the OCR to 4.75%.

"Given that the global situation remains fluid, we expect the RBNZ will refrain from making strong statements about the expected outlook for policy settings in the accompanying MPS," the bank says.

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