Food prices in December 2011 were 2.9% higher than in December 2010, with most food groups recording rises over the year, figures released by Statistics New Zealand show.
The annual growth was higher than 1.9% growth in the year to November 2011, and 1.1% in the year to October 2011. In 2011, annual food price growth peaked at 7.9% in July, which included an approximate 2.2% boost from the October 2010 GST increase.
In the December month food prices rose 0.2% from November, Stats NZ said.
Here is the reaction from ASB economist Christina Leung:
Food prices increased 0.2% over December, in line with our expectations. Underpinning the increase was a modest recovery in fruit and vegetable prices. This series is typically volatile reflecting the effects of weather conditions on crop yields. The 2.5% increase in fruit and vegetable prices follows some sharp declines in recent months as prices fell back from the high levels seen around the middle of 2011.
Meat prices also increased, as higher international prices flow through to the retail level here in NZ. Meanwhile, there was another small increase in restaurant and takeaways prices. Given labour is a key input cost in this component, we expect further increases over the coming year.
Offsetting these increases was a decline in the price of grocery foods and non-alcoholic beverages. There has been a moderation in grocery food price inflation in recent months, reflecting the easing in global commodity prices
The results indicate food price inflation remain relatively subdued, with the 2.9% increase in food prices over the past year well below the double-digit annual price growth seen over late 2008. The December food price result is in line with our forecast, and we expect the release of CPI on Thursday will show a 0.2% increase for Q4.
(Updates with ASB comment)