The latest food price data release confirms the ongoing decline in food prices. November data shows food prices have been below year-earlier levels for six out of the last seven months, with October being the only exception. From October to November food prices fell by 0.8 percent, being the third consecutive month of month-on-month declines in food prices.
November’s decline was driven by a large drop in vegetable prices as well as a fall in meat and grocery food prices.
Vegetable prices in November fell 11 percent, while fruit prices rose 5.4 percent. This meant an overall fall in fruit and vegetable prices of 4.4 percent. There was also a decline in meat, poultry and fish (1.6 percent) and grocery food (0.2 percent).
While there was an overall decline in November’s food prices, there was still an increase in the price of restaurant and ready-to-eat meals (up 0.3 percent) and non-alcoholic beverage (up 0.4 percent).
Annually, food prices declined 0.6 percent from November last year
Annually, from November 2011 to November 2012, food prices were lower; especially non-alcoholic beverages; meat, poultry and fish; and grocery food subgroups. Grocery prices have continued to decline, 3.61 percent lower than November last year. This decline was heavily influenced by lower prices for milk, yoghurt, and cheese. However, prices are expected to rise for dairy products in the coming year, as extreme weather in major milk producing countries, (droughts in the US, Ukraine, Russia, and extreme wetness in Brazil and Argentina) will restrict feed supplies for stock.
With severe weather affecting the overseas milk supply, Fonterra raised its dairy payout by 25 cents to $5.50 cents per kilogram of milk solids. Although higher, this payout is still lower than last year, and milk prices are not expected to reach 2011 levels.
However, annually, fruit and vegetable prices have continued to be higher than last year. Fruit and vegetable prices were 7.9 percent higher than November last year, with increases of over 90 percent in the price of kumara, avocados, and pumpkin. Poor weather conditions during this growing season have meant smaller crops for both kumara and avocados. In the main growing area for avocados, the Bay of Plenty, the crop is expected to be half of last years for the season ending in March 2013.