Statistics New Zealand says food prices have had their smallest increase since September 2018.
Food prices rose 0.2% in the 12 months to May, with the lower food price inflation driven by cheaper prices for fruit, vegetable, meat, poultry, and fish.
Fruit and vegetables prices were down 11.4% and meat, poultry, and fish prices were down 1.2%.
“Prices for meat, poultry, and fish recorded an annual decrease for the first time in over three years,” Statistics NZ's consumer prices manager James Mitchell said on Wednesday.
“The decrease was driven by cheaper prices for lamb chops, legs of lamb, and chicken pieces.”
The month of May also saw the largest number of food items falling in price in over three years, according to the latest Selected Price Indexes (SPI).
Last year, the SPI took over Stat's NZ's former monthly reports on food prices and rents. In addition to these monthly indexes, they now release indexes for petrol, diesel, alcohol, tobacco, airfares, and accommodation on a monthly basis.
Mitchell said 53% of the items Stats NZ tracks fell in price during May 2024, compared with 44% of items, which were more expensive.
Broader food groups like restaurant meals and ready-to-eat food prices were up 4.8% in the last 12 months, while grocery food prices edged up 1.3% and non-alcoholic beverage prices rose 2.7% in the same period.
“Eating out and ordering in are still taking the cake when it comes to the overall annual increase,” Mitchell said.
Cheese prices are at a five-year low and the price for a 1kg block of cheese was $10.02 per kilo in May 2024, down from $13.60 in May 2023.
“Of all the items in the food basket, cheaper cheese prices had the largest impact on overall food prices,” Mitchell said.
“Despite this, there was enough inflationary pressure from other items to record an overall food price increase.”
Petrol and diesel prices both fell in May, with petrol prices dropping 2.6% and diesel prices falling 3.3%.
However, petrol prices are over 50% more expensive than four years ago, while diesel prices are over 80% more expensive, according to Stats NZ.
“Motorists around the country enjoyed lower fuel prices in May, but they are still higher than May 2023,” Mitchell said.
He added that the removal of the Government’s transport temporary relief package “partly contributed” to the higher fuel prices this year.
Airfare prices experienced big falls, with domestic airfares down 7.9% and international airfares falling 8.2% in May. ASB economists expect airfare prices to continue to fall over 2024 as the “covid-19 premium unwinds”.
A turning point in the rent cycle?
In terms of rental expenses, Stats NZ noted that the ‘flow’ measure of rentals which is applicable to new tenancies, decreased by 0.1% in May, compared to April's increase of 0.1%.
The ‘stock’ measure of existing tenancies showed just a 0.3% rise in May, compared to the 0.5% uptick in April.
“Rent inflation for new tenancies has eased since the start of the year, tentatively suggesting a turning point in the rent cycle, though this tends to take nine months to be reflected in the CPI measure,” ANZ economists Miles Workman and Henry Russell said on Friday.
Workman and Russell said May’s SPI were weaker than the bank’s expectations but the weakness had stemmed from volatile components and there “remains a risk of payback next month”.
Because of this, ANZ’s Consumer Price Index (CPI) forecast currently remains unchanged at 0.6% for the June quarter and 3.5% for the June year for now.
'Encouraging for the Reserve Bank'
ASB senior economist Mark Smith said in an economic report on Friday that the SPI data would be encouraging to the Reserve Bank as it showed that pricing pressures were cooling which meant monetary policy was working.
ASB has its CPI forecast at 0.7% for the June quarter.
"The softening tone of the monthly pricing data provides us with greater confidence that CPI inflation will fall below 3% by year-end. The inflation fight is not yet over, but today’s data will be encouraging to the Reserve Bank," ASB says. "This could provide scope for the Reserve Bank to deliver Official Cash Rate cuts in 2024 providing that the circumstances warrant it."
Because of the weaker food prices data, Westpac economists said they had revised its CPI expectations from 0.8% in June to 0.6%.
ANZ and Westpac’s CPI forecast is inline with the Reserve Bank’s expectations from June’s inflation data.
“Today’s result also adds to the likelihood that inflation will slip back inside the Reserve Bank’s 1% to 3% target band by the end of this year,” Westpac senior economist Satish Ranchhod said.
March year CPI inflation was 4%.
Here is the detailed SPI information as supplied by Stats NZ:
70 Comments
Oh look, companies can't charge through the nose anymore when nobody has money.
Unless consumers are happy to use disposable income + savings and / or consumer debt
Given our drunken sailor / paycheck to paycheck disposition, things have held up relatively well up to now.
When we forgo consumption - starting with nice to haves like craft beer and artisan foods - that's when things get really interesting. The related businesses go to the wall and this is felt across the supply chain. Even puts pressure on the Ponzi.
Um ... Once again I see the royal "we" thrown around with gaye abandon.
Let's be clear here ... In NZ there are a huge number - 40% plus - with savings, getting richer, and doing just fine.
The remaining 60%? Not so much.
And the NACTF tax cuts - where the bulk is going to the top 40% - has just made this divide even worse.
Averages - the royal "we" - are sucky things which often completely misrepresent the reality.
Um ... Once again I see the royal "we" thrown around with gaye abandon.
Let's be clear here ... In NZ there are a huge number - 40% plus - with savings, getting richer, and doing just fine.
That's a similar explanation I've been hearing at the water cooler.
And I don't necessarily disagree. The 40%ers are the core consumer segment buying the craft beer and artisan foods. Therefore, she'll be right.
There's just one problem here. For a craft beer brand to grow, you either have to increase consumption among your existing buyers or attract new buyers from the 60%.
So what if 10% of your 40% cuts back on nice to have consumption? Can the supplier handle that in a relatively small addressable market like Nu Zillun?
Agreed. It a point worth considering.
Exactly how it plays out for any particular business depends on their customers' profiles.
Understanding who one's customers are is fundamental to success in any business as it allows the business to plan for the ups and downs. Thus a business whose customers come from the 60% may see little change in a downturn as while some of their customers in the 60% may drop out - others from the 40% may drop in. Smarter / larger businesses will also have a product ranges that cater for all ranges and may only see the sales mix change. No two businesses will be alike although in many sectors some will be similar.
. Smarter / larger businesses will also have a product ranges that cater for all ranges and may only see the sales mix change.
You mean like P&G? An ex-client of mine from North Asia to South-East Asia.
Actually P&G brands can't really be everything to everybody. The nearest they probably got was with Gillette selling cheaper disposable razors up to Fusion 5.
IMO think you underestimate the cost to serve in a relatively small market like Nu Zillun. Also I think you overestimate the financial strength of the 40%. 75% of that segment is still very reliant on the Ponzi to deliver for them.
"75% of that segment is still very reliant on the Ponzi to deliver for them. "
The Ponzi has already delivered for most of them. The only question for the majority of them will be how much they reap. I.e. unless there is a massive crash in residential property prices, they're all going to walk away with something.
The Ponzi has already delivered for most of them. The only question for the majority of them will be how much they reap. I.e. unless there is a massive crash in residential property prices, they're all going to walk away with something.
Not so sure about that. It's all about their expectations. They have been trained to think that house prices increase organically. Housing markets are typically set at the margins, not expectations. People don't understand this well, even the experts.
"IMO think you underestimate the cost to serve in a relatively small market like Nu Zillun. "
Maybe. But I'm also quite aware of just how bad many 'managers' are in NZ. Muddling through their daily tasks if often their raison d'etre. It was a startling revelation for me seeing how much better smaller companies are managed overseas in similar sized markets to NZ's.
How much did groceries cost in 1994? 30-year-old receipt shows how much food prices have gone up https://www.nzherald.co.nz/lifestyle/how-much-did-groceries-cost-in-199…
A lot of products are up 200 percent (triple the cost in 1994), whereas dairy products approx up 50 percent on their 1994 price
...petrol prices are over 50% more expensive than four years ago, while diesel prices are over 80% more expensive, according to Stats NZ.
That's partly driven by a move towards refining lighter crude blends which intrinsically produce lighter fractions. This has acted to suppress the cost of petrol relative to diesel.
Overall much of the price increase has been driven by taxation and the decline of the Kiwi peso, it's Government and RBNZ induced inflation.
I believe we are going to see a surprise crash in inflation / CPI for New Zealand.
Retail spending down 1.5% in a year. -6.5% inflation adjusted.
Rents depressed. House prices depressed.
Might be why the NZX50 is going up so much - surprise cuts? (doesn't explain the high NZD tho)
It'll cope just fine.
I don't know where such statements come from? Do you? Is it a 'reckons'? Or just made up?
As an aside - Why would that be a bad thing? Any upgrades would be spent in NZ and the assets retained in NZ.
Far, far better than shoveling cash offshore to some Arabian country that is awash with cash and loves holding other economies to ransom by manipulating the price of oil.
Far, far better than shoveling cash offshore to some Arabian country that is awash with cash and loves holding other economies to ransom by manipulating the price of oil.
This is what is now national strategic resilience. Building less reliance on external price shocks which will rip through our economy as we have already seen the result of.
Now remind me ... What's our coalition government doing in this space ???
I don't think many governments can do much to circumvent the current malaise in EV uptakes.
- depreciaton is terrible
- EVs can't provide the usage requirements at a budget close to what most people can afford
The best thing they can do is wait until the market is mature and rational enough, if ever.
It might help if we encouraged people to buy smaller more fuel-efficient cars. My hybrid is 30-50% more efficient than my partner's similar size vehicle.
Maybe some sort of subsidy for small cars. Imagine the benefits of importing 30% less petrol each year.
Oh wait! We had that but got rid of it...
Focusing benefits on the wealthiest with the most transport access but who have the ability to choose luxury forms of private transport or even more dangerous forms then walking & PT was never going to be a winning solution on any level; environmental, economic, social, medical etc.
You see for any significant change you kind of need to consider more then just the wealthiest (on both financial and physical levels) in the nation.
"Focusing benefits on the wealthiest with the most transport access but who have the ability to choose luxury forms of private transport ..."
Strangely - this is one instance where 'trickle down' economics actually does work. With the wealthier buying into new technology it allows the 2nd hand versions to be sold - trickle down - to the less wealthy.
Doubt me? See how much an indispensable device like a mobile phone sells for on TradeMe.
Except the poorest in the nation cannot even enter EV vehicles because the design of the vehicles is to be so inaccessible to poor people physically they are literally shut out. It is like saying that private jets have trickle down. Um sure except I do not see a lot of private jets in the hands of poor people either. It is exactly like suggesting a powerchair user can climb the stairs and it is just them being lazy and must be climate deniers to not do so... except physical reality exists and in the real world accessible transport is far more imperative then benefits for the rich who have all transport choices but choose instead the least safe or most luxurious options. But sure more benefits for your mates eh. All greed no morals or ethics shines through.
Like most people who advocate for trickle down once they open their holes it is often followed by BS
Unsurpisingly the poorest in the nation faced the highest taxes of thousands of dollars to directly pay for the benefits handed out to the wealthy. The rich who brought EVs are not even paying them back the money that was taken from poor families in such blatant ableism and discrimination.
If you are going to use trickle down at least be honest to yourself and others about it. On an investor site we all know how rubbish and incorrect it is and how it is often one of the most frequently used bits in political misinformation. Amongst us here you could say your true motives were more lollies scramble for yourself and mates paid for by the poor. After all that is exactly how it was designed. To say otherwise would be ignorant of both financial, basic medical and physical mobility. I don't put that past you but I would have thought you had a modicum of sense.
Correction EVs never went away but forcing a tax on disabled people, support worker staff and trades the highest amount when they have no other transport choice did, (there literally are NO EV mobility vehicles with hoists).
But I guess you are all for abuse and harm to other people, so long as they are the poorest and the most vulnerable in the nation and the rich & most able to take any form of transport can claim benefits for luxury options. Selfish greed and appalling abusive motives in your words shine through. Initiatives like the Clean Car tax was never about improving transport in NZ for most the population. It was always a ploy by wealthy politicians & consultants to get more benefits for themselves and rich mates paid for them by the poorest in the nation, who literally have to beg for every bit of access they can get to their communities to live, access that is often only via petrol and diesel vehicles that have no known replacements in the world currently for NZ to import.
I was mailed this. A summary of all the current gloom and doom regarding the New Zealand Economy. And it even doesn't show how much money leaves New Zealand towards overseas based investors and (forestry and dairy) business owners.
https://www.macrobusiness.com.au/2024/06/reserve-bank-has-lifted-intere…
Something to watch is shipping rates. Cost to ship a 40' container from Far East to Europe and USA has gone up 400% from this time last year. Most of that increase has been been in the past few months. Thankfully costs to NZ and AU have only increased moderately so far. Mostly to anemic recession induced demand. But shipping lines are still wanting increases to justify servicing our market and forgoing the revenue available on other trade routes. 6 shipping lines control 80% of world container trade and they are all in alliances with each other on key global trade routes. Their pricing power is immense when conditions allow. Those lines made a combined profit of over 100 billion in 2021 due to covid stimulus induced demand.
A cut to NZ interest rates and a reignition of demand may see our shipping rates increase rapidly which will be inflationary as it was during covid 2021-2022.
Surprisingly it costs about the same to ship in smaller quantities from France, Germany, Sweden and Australia, (regardless of the massive difference in distance) but the US, Hone Kong and UK are 6 times the price of France & Sweden even though they have clearer & less costly routes.
Shipping prices for containers have often been 2/10ths reasonable costs and 8/10ths taking advantage of potential profits made on the trip.
It pays quite a bit to learn some Swedish and French (not that hard and often easier to self translate)
Got to love Stats NZ misuse of data periods.
However, petrol prices are over 50% more expensive than four years ago, while diesel prices are over 80% more expensive, according to Stats NZ.
Now what happened exactly four years ago? And why choose 4 years and not 5 years or 3 years as the comparative period?
In May 2020 oil was $20-$32 a barrel due to the Covid panic as international borders were shut and countries went into lockdown. Not really a meaningful comparison considering it quickly returned to normal pricing over the rest of 2020.
And hands up if you got to enjoy those super low petrol and diesel prices by taking cheap international holidays, driving a RV all around the countryside, or heading out boating on the harbour in May 2020? What, no-one?
The price of oil is basically unchanged from June 2021 (and down massively from the $120 a barrel it was in June 2022). (So if petrol and diesel prices are a lot higher today, then its probably got something to do with the fact that we gave up refining our own.
Odd. Another poster above says, "At the height of the pandemic when gas fell $1 or so a litre and oil was trading below $0 a barrel?". Are you saying they're wrong?
Ah. No. You correctly observe that it's "Not really a meaningful comparison considering it quickly returned to normal pricing over the rest of 2020. "
Indeed it did quickly return to 'normal'. In a few weeks. The big problem was the stuff in transit didn't have anywhere to unload. Money talks and the situation was resolved in no time.
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