GDP and Inflation

Milk prices down in June, but fruit and veg prices up

Friday July 13, 2012 Kelly Dustow

The month of June saw food prices increase by 0.2 percent according to Statistics New Zealand’s latest food price index.

 

Most of the rise in food prices has been due to fruit and vegetables as the New Zealand growing season comes to an end.  As shown in the figure, fruit and vegetables increased by 9.0 percent last month.

 

 

The prices of meat, poultry and fish, grocery food, restaurant and ready to eat meals all also increased.  However, prices of non-alcoholic beverages declined over the month.

 

The rise in fruit and vegetable prices came from tomatoes (up 42 percent), avocados (up 37 percent), nectarines (up 51 percent), broccoli (up 54 percent) and lettuces (up 17 percent).

 

Despite the rise in food prices over the past month, food prices are still (albeit marginally) down on this time last year.  Compared with June 2011, food prices have declined by 0.2 percent.

 

Most of this decline has come from lower prices for lettuce (down 42 percent) and fresh milk (down 8.0 percent.  The price of other dairy products such as cheddar cheese and butter have also declined, down 16 percent and 24 percent respectively on year earlier levels.

 

Declining food prices in New Zealand is consistent with the overall trend in worldwide food prices. According to the FAO World Price Index, food prices for the June 2012 quarter have declined by 11.51 percent on June quarter last year. Average prices over the past year sees food prices up by only 0.06 percent on the previous year.  The figure shows the food prices of major subgroups over the past three years.

 

The most significant decline in world food prices over the past three months has come from the declining price of milk.  According to the FAO food price index, world milk prices for the year ending June 2012 are down 6.76 percent on year earlier levels.

 

The declining world price of milk is reflected in a significant decline in New Zealand mik prices. The 2012 Situation and Outlook publication from the Ministry for Primary Industries (MPI) has annual milk prices coming down to prices experienced two years ago.  The MPI has milk prices declining from $760 cents per kg of milk solid in 2011 to around 608 cents per kg of milk solid in 2012.

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