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Vegetables send food prices higher in June

NZ NewswireNZ Newswire 13/07/2016 Tina Morrison

Seasonal gains for vegetables helped drive New Zealand food prices higher in June.

Food prices increased 0.4 per cent in June from the month earlier according to Stats NZ with prices were 0.5 per cent lower than June a year ago.

Vegetable prices led the gains advancing 8.4 per cent due to seasonally higher prices as cucumber jumped 72 per cent, capsicum rose 44 per cent, lettuce increased 16 per cent, and tomatoes were up 13 per cent.

After adjusting for seasonal variations, food prices fell 0.9 per cent as vegetable prices dropped 6.5 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 Monday.

ASB Bank economist Kim Mundy said the food prices data was softer than expected, prompting it to pull down its forecast for second quarter inflation to 0.5 per cent, below the Reserve Bank's 0.6 per cent forecast. ASB didn't change its view for interest rates and continues to expect the Reserve Bank to cut in August and November, she said.

The decline in annual food prices was led by lower grocery prices which dropped 2.3 per cent. Dairy product prices weakened, with cheese prices down 9.5 per cent, fresh milk slipping 3.9 per cent and yogurt falling 9.2 per cent. The average price of a kilo of cheddar cheese dropped to $7.68, from $9.12 a year earlier and marking the lowest level since September 2007, the statistics agency said.

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