Food prices in February rose 5.3% from the same month a year ago, the highest annual rise for any month since July 2009, figures released by Statistics New Zealand show.
Annual food price inflation was notoriously high through 2008 and the first half of 2009, hitting 10.8% in September 2008. However annual growth slowed to marginal increases or falls during most of 2010 before taking off again in the final three months of the year, partly due to a 2.2% rise in general prices due to the increase in GST on October 1.
Some local food prices have been pushed up by higher global commodity prices, with local effects seen in the increased media and public outrage at the price of milk in New Zealand. This led Fonterra to announce last month it would freeze the price of domestic wholesale milk for the rest of the year.
Despite the 5.3% annual rise, seasonally adjusted figures show overall food prices were flat in February from January. ASB economist Christina Leung said this suggested the Reserve Bank had some breathing space in terms of inflationary pressures, although higher global commodity prices would underpin local retail food prices through the year.
The Reserve Bank cut the Official Cash Rate by 50 basis points to 2.5% yesterday, saying it would have to keep a close eye on inflation as the rebuilding of Christchurch gets underway following the devastating earthquake on February 22.
"The key surprises were in the declines in fruit and vegetable prices and meat prices," Leung said on the monthly figures between January and February.
"Fruit and vegetable prices are typically volatile from month to month, and the 1.7% decline reflects some payback from the strong increase in the previous month. Meanwhile, the 0.5% decline in meat prices was driven by discounting of chicken in February. Partly offsetting that was an increase in lamb prices, reflecting high lamb prices globally," Leung said.
"Higher global commodity prices also flowed through to a 0.6% increase in grocery prices. In particular, higher dairy prices in the international markets were reflected in higher prices for dairy products such as milk and yogurt," she said.
"Today’s data continues to suggest that for now the RBNZ has breathing space on the inflation front. However, we expect higher global soft commodity prices will underpin food prices at the retail level over the coming year. In addition, with fuel costs being a key part of costs for food producers, the continued rise in fuel prices in recent months is also likely to underpin food price inflation. Rising food and petrol prices have the potential to restrain household discretionary spending over 2011."
See the release from Stats NZ:
Food prices were flat (up 0.1 percent) in the February 2011 month, but up 5.3 percent on a year earlier, Statistics New Zealand said today.
“A seasonal fall in fruit and vegetable prices in February offset rises in grocery food prices, particularly for dairy products,” Statistics New Zealand prices manager Chris Pike said.
Grocery food prices rose 0.6 percent in February 2011, with higher prices for milk, cheese, and eggs (up 1.5 percent) being responsible for nearly two-thirds of the grocery food increase. Yogurt prices rose 4.5 percent and fresh milk prices rose 1.1 percent. Butter prices rose 3.5 percent.
The fruit and vegetables subgroup had the largest impact on food prices in February, falling 1.7 percent. This was influenced by a seasonal fall in apple prices (down 21.3 percent). The fruit and vegetables subgroup usually falls in February.
In the year to February 2011, food prices increased 5.3 percent. This included a 2.2 percent increase in October, when the goods and services tax rose. All subgroups made upward contributions for the year.
The most significant contributors were grocery food (up 5.4 percent) and fruit and vegetables (up 10.1 percent), with higher prices for milk, cheese, and eggs (up 9.5 percent) and vegetables (up 11.5 percent).
Most prices were collected before the 22 February Christchurch earthquake.
11 Comments
Of course it's bollocks Boatman....any numbers coming from a govt dept during a time of crisis will be targetted at being "acceptable" to the peasants....just factor in inflation running above 5% and you will be close enough...buy the specials and stack stuff away. Expect all imported foodstuffs to rise and rise as Bernanke 'prints and prints'....Fonterra note, are only being nice up to the day after the election!.....Santa will bring Kiwi peasants some big surprises.
Agree, Boatman, meaningless bollocky figures....ask any family how much their shopping bill has increased. There will be the true state of affairs.
Also, how many families now eat "on special only" food?
How many families have given up buying packaged luxury food?
Standing in the queue at the supermarket the other day I was struck by how much we have become the captives of the corporates. Lining up dutifully to buy pre packaged stuff in weights determined by them. Odd weights too, Why 460 gms of bacon? Cause if you are in a hurry you'll think its 500gm and $13 wont seem all that bad!
They are really increasing the quiet shrinking of volume of goods often with a shape change of the packaging. You then have to pay just slightly more for the new look product. Bring your own bag, pack it yourself. Beep, beepbeepbeep beep.
We have reduced our dairy intake drastically and feeling better for it. I buy very few cleaning agents, making some myself from my Grandmother's formulas.
Wolly would be proud of me. Last night we had fish(caught by husband) , potatoes,spinach, parsley, beetroot, tomatoes, cucumber, rocket, carrot, coriander, lime and garlic all grown by me. I'm harvesting and storing seed like crazy, and belatedly teaching my kids all I know about growing food and making rich soil, raising seedlings and preserving the extra produce.
Time to grow more at home. I am going to dig some more of my land up to grow veggies. Home grown corn this year was the best I have ever tasted.
In 10 years time a lot of the fancy 'added value' products (such as cheesy vegemite) will be assigned to history as people buy more of the basics and make at home. Supermarkets will carry more of the basics, flour, milk, eggs, salt, butter. If you want chips, you will make your own with cooking oil.
Going to be a simple healthy lifestyle in the future I am picking.
..... They had this lass on the Radio Pathetic news , whinging that her and the family couldn't manage any more , the gumnut ought to take the GST off food , their weekly nosh bill was exceeding $ 200 ....... Their take home pay , including full WFF benefits , was $ 100 000 p.a. .......
..... my heart bled ! Forget Christchurch , we oughta organize a special footy match for her .......... $ 2000 per week in-the-hand ! How do they cope .......... poor , sweet , suffering dears .....
Gee......... look clueless inflation deniers like Vera, Rob of the North, and Julz.
What's the RBNZ's main delegated focus again? Is it inflation and currency regulation or propping up house prices and debt bubbles? Looks like the latter to me
Bollard & Co are corrupted fools who only serve Aussie banks.
No.....inflaton isnt about CPI.....
RBNZ is also morally if not legally responsible to ensure the soundness of the econony....I recall for years Bollard complaining about the actions of the Govn forced him to take the actions he did ie raise the OCR, Cullen etc didnt take a blind bit of notice....to busy with social engineering....
So the RBNZ today has to watch out for the possible collapse of house prises which would drop the inflation below the target and lower....ie deflation....
The way I see it is there is a huge balancing act Bollard is doing....look at the UK, USA and indeed much of Europe and Japan and how badly the RB's there have done....NZ with its huge private debt is no where near a basket case....probably more than anyone else we have Bollard to thank for that....
regards
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