Food prices fell 0.1% in November, while annual rental inflation was at its lowest level in over a year - but airline prices spiked.
According to Statistics NZ's Selected Price Indexes (SPI) for November the drop in food prices was mainly due to a fall for vegetables, down 7.9%. This was partly offset by a rise in fruit prices, up 4%. Overall, fruit and vegetable prices fell 2.9% in November 2024.
The SPI has been an important recent addition to Stats NZ's regular data releases. This monthly series incorporates items that together make up about 45% of the quarterly Consumers Price Index (CPI), the official measure of inflation and so therefore provides good early indications of the path of inflation.
The annual rate of inflation as per the September quarter stood at 2.2%, back within the Reserve Bank's targeted 1% to 3% range for the first time since mid-2021.
Westpac senior economist Satish Ranchhod said heading into the Christmas period, inflation pressures now "look well contained".
"That’s a welcome relief after the big price rises seen over the past couple of years."
Westpac economists are forecasting a 0.4% rise in prices over the December quarter, "with some small downside risk to the number".
"We continue to expect that inflation will track close to 2% over the coming months. We suspect today’s update will have also been in line with the RBNZ’s expectations."
ANZ senior economist Miles Workman said the latest SPI data "don’t look like a game-changer for the RBNZ’s November MPS [Monetary Policy Statement] forecast, meaning there’s nothing here to challenge their guidance that another 50 [basis-point] cut [to the Official Cash Rate] in February is on the cards."
The RBNZ cut the OCR from 4.75% to 4.25% at its last review on November 27 and gave strong signals it would cut to 3.75% in the first review for 2025 on February 19. The RBNZ is forecasting a 0.4% quarterly rise in the CPI and annual increase of 2.1% for the December quarter.
According to Stats NZ's November SPI release, annually, food prices increased 1.3% in the 12 months to November 2024, following a 1.2% increase in the 12 months to October 2024.
The 'stock' measure of rental properties measuring increases in cost of existing tenancies showed a 0.2% rise in the month and a 4.1% rise for the past 12 months. The annual rate of increase is the lowest in a year and shows that rentals - which make up about 9.5% of the Consumers Price Index (CPI) are continuing to moderate after rising strongly through 2023 and into the earlier part of this year.
However, the ever-volatile air fare prices showed a sharp spike in the month, as did tourist accommodation.
Domestic air transport prices rose 10.8% in November 2024 compared with October 2024. This was the highest increase in domestic flight prices since July 2023.
Domestic accommodation prices rose 6.9% over the month.
"The higher prices for domestic flights coincided with performances by several global artists around New Zealand," Stats NZ's prices and deflators spokesperson Nicola Growden said.
"We also saw increased domestic hotel prices, so the cost of exploring New Zealand has become more expensive."
However, international airfares and international accommodation prices decreased 2.7% and 4.6% respectively.
In terms of the detail on food prices, Growden said this was the third consecutive month that price falls for vegetables have sat alongside rising prices for fruit.
"In November, tomatoes, broccoli, and cucumber were cheaper, while apples, grapes, and kiwifruit pushed up fruit prices."
Other items that contributed to the monthly food price fall included boxed chocolates, chocolate biscuits, and steak.
These falls were partly offset by rising prices for cheddar cheese and instant coffee.
In terms of the annual rise in food prices of 1.3%, butter, milk, and olive oil were key contributors.
Here is the detailed SPI information as supplied by Stats NZ:
We welcome your comments below. If you are not already registered, please register to comment
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.