Stats NZ says food prices 'fell across the board in October'; Stats NZ has also released a new monthly series of pricing data to give more timely inflation information; airfares now dropping quickly, rents still rising, tobacco up sharply

Stats NZ says food prices dropped last month, dragging the annual rate of food price inflation back to 6.3% - which is actually the lowest rate since January of last year.

The latest food figures are part of a new monthly series to be issued from now on called Selected Price Indexes (SPI).

The SPI contains information that makes up around 45% of the Consumers Price Index, New Zealand's recognised measure of inflation. It's not a replacement for the CPI, which will continue to be issued quarterly, but is intended to provide more timely information in advance about inflation.

This new data series from Stats NZ replaces the separate releases that were formerly issued monthly for food prices and for rents. In addition to the new monthly price indexes for food and rents, Stats NZ will now publish monthly indexes for petrol and diesel, alcohol and tobacco, airfares and accommodation. The data is all backdated to 2011.

Highlights of some of this new data included that rents are still going up at a strong rate, airfares are coming down and tobacco prices saw hefty rises in October.

Ahead of the release ANZ economist Henry Russell and senior strategist David Croy said collectively, these SPI components "accounted for around 37% of our Q3 CPI forecast 'miss' and are some of the more volatile components".

"We now have information on over half the tradables [imported] inflation basket, and close to 40% of the non-tradables [domestic] inflation basket in advance. These new data will reduce the uncertainty surrounding our near-term inflation forecasts, and we hope this serves as a first step toward the release of a stable monthly CPI inflation indicator."

Food prices fell 0.9% in the October 2023 month. After seasonal adjustment, they fell 0.1%.

The annual increase of 6.3% is down from 8.0% in September.

Earlier this year the Food Price Index twice saw more than 35-year high annual increases of a whopping 12.5%.

Stats NZ's consumer prices manager James Mitchell said the fruit and vegetables subgroup was the largest contributor to the October monthly fall, followed by grocery food. The grocery items that contributed the most to the monthly fall were cheese, white bread, and muesli bars.

"Prices fell across the board in October, with only dining out and takeaway food being more expensive than in September," Mitchell said.

In October 2023 compared with September 2023:

• fruit and vegetable prices fell 3.4% (up 2.2% after seasonal adjustment)
• meat, poultry, and fish prices fell 0.7%
• grocery food prices fell 0.8%
• non-alcoholic beverage prices fell 0.4%
• restaurant meals and ready-to-eat food prices rose 0.2%.

Ahead of the SPI release Stats NZ had said that access to high quality and timely inflation data "is invaluable for good decision-making".

"New Zealand is one of only two countries in the OECD where the official CPI is not produced monthly (the other being Australia). Although we are currently unable to produce a monthly CPI, this release provides more high quality, timely data that can aid decision-making."

The quarterly CPI showed annual inflation still running at 5.6% as of the September quarter, although that is gradually falling from the high we saw in June 2022 of 7.3%.

But the new SPI information just released on Tuesday shows that inflation is still very much alive and well. Rents continue to rise at a pretty substantial rate, with new tenancies showing an annual increase of 6.1% in the past year to October. 

Airfares are only a small component of overall inflation, but such were the fare increases a year or so ago that they did have a volatile impact on the inflation rate. The latest SPI information shows, however, that fares are now falling quite fast.

Tobacco prices normally rise in January due to excise adjustments, but the price rise in October was actually the biggest non-January increase since the 2011 backdated start of the SPI.

The following is some of the nitty gritty in terms of the new SPI information.

Stats NZ said alcoholic beverages and tobacco prices rose 1.3% in October 2023 compared with September 2023:

• alcoholic beverage prices rose 0.3%
• cigarette and tobacco prices rose 2.7%

Rent prices rose in October 2023 compared with September 2023:

• the index for the stock measure of rental property prices (existing tenancies) rose 0.4%
• the index for the flow measure of rental property prices (new tenancies) rose 0.6%.

Transport prices in October 2023 compared with September 2023:

• petrol prices fell 1.1%
• diesel prices rose 1.6%
• domestic air transport prices fell 9.4%
• international air transport prices fell 7.5%.

Accommodation services prices rose 2.7% in October 2023 compared with September 2023:

• domestic accommodation prices rose 2.8%
• overseas accommodation prices rose 2.7%

In terms of annual rates of increase, Stat NZ said the following:

Alcoholic beverages and tobacco prices increased 8.3% in the 12 months to October 2023:

In October 2023 compared with October 2022:

• alcoholic beverage prices increased 6.1%
• cigarette and tobacco prices increased 11.4%.

Rent prices rose in October 2023 compared with October 2022:

• the index for the stock measure of rental property prices increased 4.2%
• the index for the flow measure of rental property prices increased 6.1%.

Transport prices in October 2023 compared with October 2022:

• petrol prices increased 13.6%
• diesel prices decreased 10.8%
• domestic air transport prices decreased 6.5%
• international air transport prices decreased 15.8%.

Accommodation services prices increased 0.8% in October 2023 compared with October 2022:

• domestic accommodation prices rose 4.9%
• overseas accommodation prices rose 0.4%

Stats NZ's consumers prices senior manager Nicola Growden said Stats NZ was "delighted to be able to respond to customer demand and publish another big portion of the consumers price index every month".

Commenting on some of the highlights of the SPI release, she said that for international and domestic travel, "it was cheaper to travel by air, but more expensive to stay at the destination".

“We usually see a rise for cigarettes and tobacco during the start of the year when excise taxes are adjusted,” Growden said.

“The 2.7% increase in prices for cigarettes and tobacco is the largest we have seen apart from the increases we usually see in January.”

Since the series began in June 2011, the next highest increase outside of January was a 1.2% monthly rise in July 2014.