Food Price Index rises 9.6% annually in July but fruit and vegetable prices fell month-on-month

A little relief at last. The Food Price Index for July rose 9.6% annually, with Statistics NZ noting in its release that overall food inflation had slowed.

Grocery food prices rose 11.9% annually, and fruit and vegetable prices backed off their eye-watering highs to increase by 6.2% in July 2023 when compared to the same month last year.

“While overall food inflation has slowed, it is comparable to the increases we saw in 2008 and 2011,” Stats NZ consumer prices manager James Mitchell said.

Increasing prices for fresh eggs, potato crisps, and six-pack yoghurt were the largest drivers within grocery food, Mitchell said.

Stats NZ said the annual increase was due to rises across all the broad food categories it measures. 

However, food prices fell 0.5% in July compared with June, Stats NZ said. Prices for fruit and vegetables such as tomatoes, avocadoes, and oranges contributed most to the monthly fall.

“While prices for fruit and vegetables fell 4.1% in the month, they are 6.2% more expensive than this time last year,” Mitchell said.

Food price inflation hit its highest level in 36 years in May with the Food Price Index rising 12.5% in the year ended April, the highest annual rate since late 1987.

Again, fruit and vegetable prices were a contributor, with a 22% annual increase in prices annually after a weather-afflicted summer growing season.

Foodstuffs said this week its costs to buy from suppliers had increased 7.4% annually.

The Infometrics-Foodstuffs New Zealand Grocery Supplier Cost Index showed more than 6,500 items purchased by the co-operative had increased in cost in July 2023, the eighth largest number of items rising in cost since 2018. 

“The number of items rising in cost in July was the largest monthly total since February 2023, and was nearly five times higher than in 2020,” said Infometrics Chief Executive and Principal Economist Brad  Olsen.

The United Nations’ (UN) index, the FAO Food Price Index, rose in July, data released earlier this month showed.

The FAO Food Price Index average 123.9 points in July, increasing 1.3% from June but 11.8% below July 2022.

The UN’s Food and Agriculture Organisation said a sharp rise in the Vegetable Oil Price Index drove the increase. It rose 12.1% in June 2023 when compared to June 2022 after seven months of falling prices.

“International sunflower oil prices rebounded by more than 155  in the month, due mostly to renewed uncertainties surrounding the exportable supplies after the Russian Federation’s decision to end implementation of the Black Sea Grain Initiative. World prices for palm, soy and rapeseed oils increased on concerns over output prospects in leading producing countries.”

The FAO All Rice Price Index increased by 2.8% when compared to the previous month and rose 19.7% year-on-year to reach its highest nominal level since September 2011, the food agency said.

“This upward pressure of rice prices raises substantial food security concerns for a large swathe of the world population, especially those that are most poor and who dedicate a larger share of their incomes to purchase food,” it warned.

It said India’s July 20 prohibition of non-parboiled indica rice exports would amplify upward pressure already exerted on prices with seasonally-tighter supplies and Asian purchases. 

FAO said export restrictions can bear adverse consequences on production, consumption and prices that last beyond the duration of their implementation and risk exacerbating high food domestic inflation in many countries.

The FAO Dairy Price Index declined by 0.4% in July and was now 20.6% below its July 2022 value. 

“World cheese prices recovered slightly after steep recent declines as hot weather affected seasonally declining milk supplies in Europe.”

The FAO Cereal Price Index declined by 0.5% from June.

International wheat prices rose by 1.6% their first monthly increase in nine months, due to uncertainty over exports from Ukraine as well as continued dry conditions in North America, FAO said.