New Zealand food prices fell in March, adding to the evidence that inflation is benign, as prices fell for fruit and vegetables, such as apples and pumpkin, and for chicken pieces.
The food price index fell 1 percent last month, according to Statistics New Zealand. Prices declined for all five sub-groups measured, the first time that has happened since October 2009. Prices rose 0.2 percent compared to March 2011.
Food prices for March are the final component of consumer prices (CPI) for the first quarter, which are due for release on Thursday and are expected to show there’s little pressure on the Reserve Bank to raise interest rates soon. The inflation rate was 0.6 percent in the first three months of the year, according to a Reuters survey of economists.
Following the figures, ASB economists revised down their March quarter CPI forecast from 0.6% to 0.5%.
Prices of fruit and vegetables fell 4.2 percent in March, with the biggest declines recorded for apples, down 24 percent as the harvest pushed an abundance onto the market, while pumpkin fell 26 percent and grapes dropped 20 percent. Potatoes declined 5.8 percent.
Meat, poultry and fish prices fell 1.8 percent, driven by a 4 percent decline in the price of chicken pieces. Grocery prices fell 0.3 percent, with chocolate biscuits falling 7.8 percent. Bacon fell 6.5 percent.
Restaurant meals and ready-to-eat food fell 0.2 percent and non-alcoholic drink prices fell 0.1 percent.
Strawberries were the standout price gainer, rising 24 percent, and avocados gained 35 percent. Ham rose 6.9 percent and potato crisps rose 4.5 percent.
'Little need to raise OCR'
ASB economist Jane Turner said the weaker-than-expected food prices reading meant ASB had lowered its forecast for Q1 CPI to 0.5% and 1.6% yoy.
"The broad-based weakness in the food price index over March highlights the lack of inflation within the economy at present. Inflation is likely to remain at the bottom of the RBNZ’s target band of 1-3% over 2012 and we see no urgency to increase the OCR before the end of the year," Turner said.
With Alex Tarrant