GDP and Inflation

Food prices increase in October – the first rise since April this year

Wednesday November 21, 2012 Kelly Dustow

From October 2011 to October this year, food prices have risen 0.3 percent.  This is the first rise in food prices since April this year. The main driver behind this rise was increased fruit and vegetable prices.  However, with the summer months approaching, we would expect fruit and vegetable prices to ease over the next few months. The first indication of this has been the decrease of 0.6 percent in food prices from September to October.

 

Since September, food prices have declined by 0.6 percent. Most of this decline came from lower prices for fruit and vegetables (down 5.5 percent) and restaurant meals and ready-to-eat food (down 0.5 percent).

 

 

 

While there was an overall decline in October’s food prices, there was still an increase in the price of meat, poultry & fish (up 0.1 percent), grocery food (up 0.5 percent), and non-alcoholic beverage (up 0.6 percent).

 

The decline in fruit and vegetable prices were from lower vegetable prices.  Compared to last month, vegetable prices declined by 8.9 percent in October. In particular, significant declines were experienced in the price of tomatoes (down 32.4 percent), lettuce (27.3 percent), and broccoli (10.9 percent). According to Statistics New Zealand, lower prices in these particular vegetables are not unusual for this time of year.

 

Rising grocery prices over the past month came from pasta products (up 5.7 percent), pastry cook products (up 3.4 percent), and other grocery food (up 2.4 percent).

 

Annually, food prices have risen 0.32 percent from October last year Compared to last year, food prices have been declining since May this year, with October seeing the first annual rise in food prices.  In October, the price for all food sub-groups except grocery foods increased.

 

 

 

Significant changes since last year included an 8.4 percent rise in fruit and vegetable prices and a 2.7 percent decline in grocery prices.  For the fruit and vegetable subgroup, the prices were up for tomatoes, kumara, avocados, and pumpkin, while the decline in dairy prices was affecting the decline in grocery prices, namely milk, yoghurt, and cheese.

 

 

 

The graph above shows the seasonality of fruit and vegetable prices over the past three years.  Over the next month, we would expect prices to come down and then pick up again over the New Year.  The above graph also showed that fruit and vegetable prices have come down compared to 2011.

 

The above also shows that grocery food prices have declined over the past year but look to be picking up again.  With grocery food accounting for the bulk of a common basket of goods (close to 40 percent), this might have a negative effect on consumers over the coming months.