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NZ annual food prices slide in July

NZ NewswireNZ Newswire 11/08/2016 Tina Morrison

New Zealand annual food prices fell in July, as weaker dairy prices weighed on the grocery segment.

Food prices dropped 1.3 per cent in July from the same month a year earlier, the biggest decline in the series this year, Statistics New Zealand said. Prices were down 0.2 per cent from June.

Grocery prices dropped 2.9 per cent in the year, led by dairy products as cheese fell 11 per cent, fresh milk dropped 3.2 per cent, yoghurt slid 9.7 per cent and butter shed 11 per cent. This was partly offset by a 37 per cent increase in the price of honey. Dairy product prices have remained low for longer than expected amid a global glut in supply and weak demand.

"The price of cheese has continued to fall in the year to July 2016, to its lowest price since October 2009," said Statistics NZ consumer prices manager Matt Haigh. "The average price of a kilo block of the cheapest available mild cheddar cheese was $7.39 in July 2016, down from $9.07 in July 2015."

The food price index accounts for about 19 per cent of the consumers price index, which the Reserve Bank monitors when setting interest rates. Consumer prices rose an annual 0.4 per cent in the June quarter, the seventh quarter below the Reserve Bank's 1-to-3 per cent target band. Governor Graeme Wheeler cut the benchmark interest rate to a record low 2 per cent and signalled further easing will be required to ensure that future inflation settles near the middle of the target range.

Thursday's data showed meat, poultry and fish prices dropped 2.1 per cent as chicken fell 9.9 per cent, and pork shed 5.9 per cent. Beef bucked the trend, advancing 4.6 per cent.

Fruit and vegetable prices slid 0.9 per cent. That was led by a 1.4 per cent drop in vegetable prices, influenced by lower prices for tomatoes, kumara and lettuce while fruit prices overall were little changed. Cucumber prices jumped 16 per cent to $4.84 for a 300-gram cucumber, the highest price recorded since the series began.

Restaurant meals and ready-to-eat food advanced 1.9 per cent, while non-alcoholic beverage prices declined 2.7 per cent on lower prices for energy drinks.

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