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NZ food prices fall in May

NZN 14/06/2016 Paul McBeth

New Zealand food prices fell in May, snapping two months of gains, as cheaper tomatoes and potatoes brought down the price of fresh produce.

Food prices fell 0.5 per cent last month and were 0.3 per cent lower than May 2015, Statistics New Zealand said.

The food price index has fallen on a yearly basis in seven of the last eight months, further suppressing broader inflation which has remained below the Reserve Bank's 1-to-3 per cent target band since December 2014.

The fall in May food prices was led by a 4 per cent drop in vegetable prices, while fruit prices were down 0.8 per cent.

Cheaper milk, cheese and eggs offset gains in other grocery items, leaving the subgroup unchanged in May, while prices for non-alcoholic drinks fell 1.2 per cent.

Meat, poultry and fish prices rose 0.2 per cent in May, led by a 5 per cent rise in mutton, lamb and hogget prices, while restaurant meal prices edged up 0.1 per cent.

The food price index accounts for about 19 per cent of the consumers price index, the Reserve Bank's mandated measure, and is typically seen as a barometer of wider inflation. Annual inflation rose at a 0.4 per cent pace in the March quarter, and Statistics NZ will release data for the June quarter on July 18.

Tuesday's data show the decline in annual food prices was led by a 3.5 per cent fall in meat, poultry and fish.

Poultry prices were down 10 per cent from May 2015, while pork prices fell 7.2 per cent, mutton, lamb and hogget dropped 5.1 per cent, and preserve, prepared and processed meats were 5.87 per cent cheaper.

Grocery food prices fell 1.8 per cent from a year earlier with fresh milk 6.4 per cent cheaper and cheese prices down 4.9 per cent. Non-alcoholic beverage prices fell 1.6 per cent in the year, while restaurant meals and ready-to-eat food prices rose 1.7 per cent. Fruit and veges were 5.8 per cent more expensive last month from a year earlier as 11-year high prices for avocados drove a 17 per cent jump in fruit prices.

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