Food prices are rising again after a fall in the year to June, but the previously rapid rise in rents appears to be abating.
Statistics NZ says in the year to July 2024 food prices increased 0.6%, following a 0.3% decrease in the year to June.
However, separately rents increased 4.3% in the year to July and this is actually the slowest rate of increase since November 2023, showing that the recent rampant increases in rentals may finally be easing.
These figures are all part of Stats NZ's Selected Price Indexes (SPI), which features goods that make up about 44% of the quarterly Consumers Price Index, the official measure of inflation.
The SPI features some of the more volatile components in the CPI and has therefore proven a popular addition to the range of statistics being offered by Stats NZ since its introduction last year.
The latest figures come just a day after the Reserve Bank (RBNZ) cut the Official Cash Rate from 5.5% to 5.25% and forecast that annual inflation would fall to just 2.3% in the September quarter, down from 3.3% in June.
ASB senior economist Mark Smith said he had earlier thought that the RBNZ's inflation pick was "on the light side", but the latest SPI data "suggests that a sharp deceleration in headline inflation is not outside the realms of possibility, even though we believe that annual non-tradable inflation will prove to be slower to moderate".
ANZ senior economist Miles Workman said July's SPI "suggest a smidgen of downside" risk to the ANZ's own September quarter CPI forecast of 1.0% quarter-on-quarter (which would give an annual rate of 2.6%).
"However, some of the surprise came from the more volatile components, meaning there’s plenty of scope for payback next month," he said.
"Given typical volatility, we’re comfortable that today’s data are in the ballpark of our Q3 CPI forecast, and consistent with the RBNZ [Reserve Bank] delivering another 25bp cut [to the OCR] in October."
Westpac senior economist Satish Ranchhod said the SPI result "is consistent with a continued easing in inflation in the September quarter".
"That drop might be occurring a bit faster than expected but will wait to see how some of those volatile prices evolve," Ranchhod said.
He noted that the rent increases were slower than they had been and said with population growth slowing, "this could be a sign that the pressure on housing costs is at last moderating".
In terms of food prices, these were up 0.4% on a seasonally adjusted basis in July 2024, following a 1.0% increase in June 2024.
Fruit and vegetables were the largest contributor to this increase, with prices up 4.5%. After adjusting for seasonal effects, fruit and vegetable prices were up 0.8 percent.
"Price increases were seen from typical seasonal produce such as tomatoes, cucumbers, and apples,” Stats NZ's consumer prices manager James Mitchell said.
Going back to the 0.6% annual increase in food prices to July, this was partly driven by higher prices for restaurant meals and ready-to-eat food, which increased 3.7% in the 12-month period.
Despite the annual increase in overall food prices, prices decreased across the 12 months for fruit and vegetables (down 8.5%), and meat, poultry, and fish (down 1.1%).
Cheaper prices for kumara, lettuce, and potatoes drove the fall in fruit and vegetable prices.
“Kumara prices dropped to $5.72 per kilo, almost one-third of the peak price of $14.25 per kilo in January 2024,” Mitchell said.
In other SPI information, petrol prices fell 0.5% in July 2024, while diesel prices fell 0.2%. The Auckland regional fuel tax of 10 cents per litre plus GST was removed on 30 June 2024.
"Despite an overall decrease in petrol prices, Auckland was the only region to see lower prices in the month, while every other region in the country saw an increase," Mitchell said.
In terms of the rental prices, the so-called 'stock' price of existing rental agreements rose 0.2% in July, which was the lowest increase since early 2023. As stated further up, the annual increase for the 'stock' price at 4.3% was the lowest annual rate of increase since November 2023.
In other pricing information, the highly volatile air fare prices rose again in July - during the school holidays - after falling in June.
Domestic air travel fares were up 6.4% compared with a 15.4% fall in June, while international fares rose 3.8% compared with a 10.6% fall in June.
Here is the detailed SPI information as supplied by Stats NZ:
37 Comments
by HouseMouse | 15th Aug 24, 11:35am
Multiple signals showing inflation has not been completely quelled
by Let me be Frank | 15th Aug 24, 11:49am
Multiple signals showing price increases have not been completely quelled
Very odd, I won't draw conclusions but my eyebrows raise when I see very similar posts made in quick succession.
Also peculiar that we see 2 upvotes on HouseMouse's post.
Japanese shoppers pay up to 35% less for Aussie beef than Aussies. There are a number of reasons for this:
1. The Japanese retail environment is more competitive whereas Aussies doesn't—resulting in less competitive pricing and the ability to keep profit margins high by squeezing shoppers.
2. The quality of Aussie beef sold in Japan is often reported to be superior, with better trimming and presentation. This higher standard can justify the price differences and attract consumers, even at competitive prices.
3. Competitive pricing strategies adopted by Japanese retailers, which are not constrained by the same market dynamics as Aussie supermarkets.
4. Govt policies that enable to have a more competitive market environment. This works to keep prices low and benefit shoppers.
https://www.beefcentral.com/news/comparison-suggests-aussie-beef-retail…
During the Covid period, Japan's real GDP per capita has been far stronger than that of Aotearoa P.
And another reality is that MFAT has been pivoting the narrative towards Japan from China for export of NZ ingredients, produce, etc.
So if Japanese shoppers want cheaper prices for kiwifruit and milk powder, you have to understand who wears the pants in the relationship. You can't tell the Japanese what they have to pay. Doesn't work like that.
Of course if you think Aotearoa doesn't need trade with other nations, that's another story.
During the Covid period, Japan's real GDP per capita has been far stronger than that of Aotearoa P.
For the last 30 years, Japan's economy has barely been able to shift, even after so much cheap money and public debt being thrown at it.
So if Japanese shoppers want cheaper prices for kiwifruit and milk powder, you have to understand who wears the pants in the relationship. You can't tell the Japanese what they have to pay. Doesn't work like that.
That's the first time I've heard "can't afford to pay any more" being referred to as wearing the pants. Ever noticed the relatively lower amount of animal protein in a dish in Japan?
I assume you've dealt commercially in bulk alongside lower volume clients. Larger clients invariably get far better rates for things.
For the last 30 years, Japan's economy has barely been able to shift, even after so much cheap money and public debt being thrown at it.
Data doesn't lie P. As I said, real GDP per capita has been much higher in Japan than Aotearoa from pre-Covid to now. In fact, ours has been negative and among the lowest in OECD nations.
Japan is aware of its woes, hence its policies to ensure inflation doesn't erode spending power. Aotearoa doesn't have such policies.
That's the first time I've heard "can't afford to pay any more" being referred to as wearing the pants.
I don't think you understand P. We have what we call price setters and price takers. The Aussies know that they're price takers in the Japanese market. Therefore, they need to have strategies that ensure that they can sell incremental volume instead of increasing margins.
That's a fundamental business issue.
Data doesn't lie P. As I said, real GDP per capita has been much higher in Japan than Aotearoa from pre-Covid to now.
Yeah, I'm talking longitudinally, and why things have remained cheap in Japan. You cannot take COVID era indicators as being indicative of much. My revenue won't have performed as well as a firm that could work from home, but I may have smashed them the 10 years prior.
I don't think you understand P. We have what we call price setters and price takers. The Aussies know that they're price takers in the Japanese market. Therefore, they need to have strategies that ensure that they can sell incremental volume instead of increasing margins.
That's a fundamental business issue.
This is just indicative of the flaws in selling goods domestically and internationally in a global market. Smaller players, have less leverage. It's why I'd charge you more per screw and sheet of roofing iron if I was doing a gazebo for you, compared to building a stadium for someone else.
On the flipside, Australasian items sell for premiums in other markets. Lower volume, more affluent customers.
You don't understand P. It doesn't matter if you can sell at higher margin in the UAE. If your volume doesn't add up, both ROI and ROE (effort), it's a waste of time and resources.
If the Aussie meat industry lost Japan, it would be in serious trouble. Similarly with Aotearoa selling milk powder to Japan. I referenced a very good article. If this is of interest, you should educate yourself.
The wife and I are partial to going out to eat, and also getting the occasional takeaway in (I never claimed to be a personal finance expert ... )
However, we've cut back on a couple of usual spots not so much because of the price but because of the quality relative to price.
E.g. Thai we normally get every week or so as a lazy mid-week dinner, it's now up to $60 takeaway for 2 mains and an entree. However, last few meals the quality has been noticeable worse (tougher, chewier meat, soggy vegetables with less flavour etc).
I didn't mind (as entitled as it sounds) paying $60 as the price has been for a while now when the quality was good and it was truly an excellent meal. Now the quality has dropped, we find it unacceptable at the price point.
Same goes with pizza. e.g. Hell Pizza has long been criminally expensive but the topping quality was better than Pizza Hut or Dominos. Recent orders have had stingy toppings, poor taste and generally diminished quality, so may as well get the 2 for $20 Pizza Hutt which isn't much worse but also a fraction of the price.
I feel for hospitality businesses insomuch that presumably if they charged at the level needed to maintain quality and/or portion size, then prices would rise even higher and further kill business. At the same time, I don't want to pay good money for crap food. I don't mind paying crap money for crap food, if I'm feeling like convenience.
We have pretty much cut going out and I have had to up my skills in the kitchen. Now doing a proper roast chicken and got the slow cooker on the go all day with some cheap cuts of meat that taste great with the beef slow cooker mix and a cup of Shiraz thrown in for good measure. Thai here is still very good but its gone over $70 now.
This is actually a great comment because it approaches evidence-based observation. If we had enough evidence-based comments like this we could draw valid generalizations about the real state of the economy and inflation. That would be the case if all commentators took careful note of the price increases they encounter each time they spend money. Such evidence, assuming it was given honestly, would give a more realistic account of inflation than even the CPI index.
Unfortunately, most commentators would not make the effort. It's far easier to voice an evidentially unsupported opinion.
But, Dumbthoughts is on the right track when he provides evidence that food or meals have deteriorated in quality. I have noticed this too.
Inotherwords, a reduction in quality is also tantamount to an increase in price inflation. And so is a reduction in the size of any product in the supermarket that now comes in a smaller container than it used to but which now sells for the same price, or, usually, at an increased price.....which is double inflation on that product.
Can some economist or financial journalist explain to us commoners whether or not the above indirect contributions to inflation are measured by such indexes as the CPI and therefore give us a truer measure of inflation if they are included.
Indeed. Companies won't tell you they are shrinking the size of their product and upping the price simultaneously. Remember how big cookie times used to be, and snack bars for kids lunches, bags of chips have slowly crept down over the years 10g at a time and I've noticed the prices haven't one back down though the price of potatoes dropped right off since last years wet conditions.
How was the perceived crime there Jimmy?
B&T buried news of their branch closure by claiming perceived crime and anti-social behaviour.
I perceive that to be BS and more related to falling sales and profits. If that branch was going gangbusters they’d hire a small militia to protect it!
Never had any feeling of threats shopping or eating in Glen innes or Panmure.feels like a laid back slow paced community shopping area.I also noted that Barfoot BS " reasons"on the branch closure, I will second your opinion. They provided a property management service for a kings road rental i had at one time, never felt like the sharpest service, or branch presentation. Not surprised if they have been out- competed - to - failure, locally, by hungrier,better operators
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