Food prices rise 4.7% in September from year ago, Stats NZ figures show; Lowest annual rise since Jan; Prices fall 1% from August

Food prices rise 4.7% in September from year ago, Stats NZ figures show; Lowest annual rise since Jan; Prices fall 1% from August

Food prices rose 4.7% in September from the same month a year ago, the lowest annual rise for any month since a 3.8% rise in January, figures released by Statistics New Zealand show.

The rise included an estimated 2.2% general price rise due to the increase in GST on October 1 last year, Stats NZ said. September is the last month in which the GST hike will show through in the annual figures, as prices in October will be compared with the same month last year when GST was hiked.

The recent peak in annual price rises was 7.9% in July, before falling to 6.6% in August and the 4.7% rise in September. Annual rises had been over 10% in 2008, before falling in 2009 and the first half of 2010.

The downward trend - over the last three months before the GST increase goes out of the annual figures - should be welcome news to Reserve Bank Governor Alan Bollard, who is charged with keeping general inflation within a 1-3% band over the medium term. The Reserve Bank is allowed to look through one-off price spikes caused by a rise in government taxes like GST and the Emissions Trading Scheme.

In its September quarter Monetary Policy Statement, the Reserve Bank forecast March year inflation would drop from 4.5% in 2011 (which included the GST impact) to 2.1% in 2012, 2% in 2013, and 2.2% in 2014 - well within its target band.

'OCR on hold til March'

ASB economist Christina Leung said the figures hinted at a moderation in food price inflation.

"Overall, it adds at the margin to recent inflation indicators which suggest the RBNZ has some breathing space on the inflation front for now. With the volatility in global market dominating the RBNZ’s attention for now, we continue to expect the RBNZ will leave the OCR on hold until March next year," Leung said.

Vege prices fall

Monthly figures showed food prices fell 1% in September from August due to a fall in vegetable prices, Stats NZ said.

The largest downward contributions came from seasonally lower prices for lettuce (down 33 percent) and tomatoes (down 27 percent). Prices for most green vegetables fell, which is usual for this time of year. If vegetable prices had remained unchanged, the food price index would have shown a rise of 0.3 percent, Stats NZ said.

"Banana prices (up 24 percent) bounced back in September after slipping 21 percent in August. A temporary increase in banana imports caused prices to fall in August to their lowest level in five years," Statistics NZ prices manager Chris Pike said.

Grocery food prices fell 0.2 percent in September 2011. This is the second consecutive monthly fall in grocery food prices. This included a price fall for bread (down 1.1 percent), which was the third monthly fall in a row. Bread prices are now back to levels last seen in March of this year, Stats NZ said.

All subgroups had price increases in the year to September 2011: grocery food (up 4.8 percent), meat, poultry, and fish (up 6.3 percent), restaurant meals and ready-to-eat food (up 4.4 percent), non-alcoholic beverages (up 7.2 percent), and fruit and vegetables (up 0.9 percent).

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oh look at that.....4.7% - GST effect at 2.2% = 2.5% CPI....

where's Wolly.....

and the banks comment, OCR rise not til March....if they had followed core they could have seen that months earlier....

Commodities is still dropping, that feeds into the CPI....so CPI is going to be quiet while a large section of retailing is -ve% ie deflation....

So the chances of having to raise the OCR look about zero for 2012 at this rate.....let alone March....25% chance the OCR will be dropped in 2012, 50% stay as is, 25% rise....

"Meat, poultry and fish up 6.3%...."

I really would like to see how they get these numbers....for instance for me,

Poultry, The sticker price for chicken breast at my pack n' save is $24.95/kilo up from $21.95.....BUT the actual discounted (but regular) price is $15.95 down from $18.95. It has been that way for 3+ months...Ive even seen that price ($15.95)  in the local (small) New World last week....

Sausages we like in Moore Wilson's, $12.95/kilo.....not moved in 6 months....Duck breasts dropped 6 months ago to $16.95 down from $18.95.....

Vine tomatoes $4.95/kilo down from $12.95 a kilo.....

etc

etc

regards

 

Well that's another underpinning for the housing market, along with the cheap mortgage rates and excellent terms of trade. And general mood of the country will be uplifted if there's  a RWC win.

"September is the last month in which the GST hike will show through in the annual figures, as prices in October will be compared with the same month last year when GST was hiked." 

They cannot be serious - price increases just compound annually for me - hence I am totally indifferent if it's GST, inflation or whatever - I live in a nominal world receiving nominal income after paying nominal taxes.

And on that basis the OCR @ 2.5% is a highly negative return and a borrower of my loot is having a laugh at my expense.

It's not the RBNZ's job to pick winners and losers - especially as those tasked with the authority never fail to self -increase their inflation adjusted after tax emoluments.    

The GST hike was offset by a tax cut....therefore most NZers on mid and higher incomes should have been better off.....or at least neutral

Amazing how many ppl seem to miss this....

regards

Miss what?

I miss my income return and the fact it is not credit risk adjusted as the rating agencies think it should be.

The change in tax rates are no compensation if my outgoings remain the same or rise, which is the case, and my income colllapses and the principal is at risk.  

State price control on one segment of a society's activities creates serious distortions in all the others.

Any business endeavour I might undertake is devalued by the fact that I can only sell it for money which is depreciating in purchasing power at great rate of knots - determined by the RBNZ . 

Is it any wonder interest.co.nz has belatedly started to cover bullion prices. Gold has already increased five fold versus the NZD/USD pair in terms of purcashing power in not so many more years.