Food prices fell 0.1% in November, while annual rental inflation was at its lowest level in over a year - but airline prices spiked.
According to Statistics NZ's Selected Price Indexes (SPI) for November the drop in food prices was mainly due to a fall for vegetables, down 7.9%. This was partly offset by a rise in fruit prices, up 4%. Overall, fruit and vegetable prices fell 2.9% in November 2024.
The SPI has been an important recent addition to Stats NZ's regular data releases. This monthly series incorporates items that together make up about 45% of the quarterly Consumers Price Index (CPI), the official measure of inflation and so therefore provides good early indications of the path of inflation.
The annual rate of inflation as per the September quarter stood at 2.2%, back within the Reserve Bank's targeted 1% to 3% range for the first time since mid-2021.
Westpac senior economist Satish Ranchhod said heading into the Christmas period, inflation pressures now "look well contained".
"That’s a welcome relief after the big price rises seen over the past couple of years."
Westpac economists are forecasting a 0.4% rise in prices over the December quarter, "with some small downside risk to the number".
"We continue to expect that inflation will track close to 2% over the coming months. We suspect today’s update will have also been in line with the RBNZ’s expectations."
ANZ senior economist Miles Workman said the latest SPI data "don’t look like a game-changer for the RBNZ’s November MPS [Monetary Policy Statement] forecast, meaning there’s nothing here to challenge their guidance that another 50 [basis-point] cut [to the Official Cash Rate] in February is on the cards."
The RBNZ cut the OCR from 4.75% to 4.25% at its last review on November 27 and gave strong signals it would cut to 3.75% in the first review for 2025 on February 19. The RBNZ is forecasting a 0.4% quarterly rise in the CPI and annual increase of 2.1% for the December quarter.
According to Stats NZ's November SPI release, annually, food prices increased 1.3% in the 12 months to November 2024, following a 1.2% increase in the 12 months to October 2024.
The 'stock' measure of rental properties measuring increases in cost of existing tenancies showed a 0.2% rise in the month and a 4.1% rise for the past 12 months. The annual rate of increase is the lowest in a year and shows that rentals - which make up about 9.5% of the Consumers Price Index (CPI) are continuing to moderate after rising strongly through 2023 and into the earlier part of this year.
However, the ever-volatile air fare prices showed a sharp spike in the month, as did tourist accommodation.
Domestic air transport prices rose 10.8% in November 2024 compared with October 2024. This was the highest increase in domestic flight prices since July 2023.
Domestic accommodation prices rose 6.9% over the month.
"The higher prices for domestic flights coincided with performances by several global artists around New Zealand," Stats NZ's prices and deflators spokesperson Nicola Growden said.
"We also saw increased domestic hotel prices, so the cost of exploring New Zealand has become more expensive."
However, international airfares and international accommodation prices decreased 2.7% and 4.6% respectively.
In terms of the detail on food prices, Growden said this was the third consecutive month that price falls for vegetables have sat alongside rising prices for fruit.
"In November, tomatoes, broccoli, and cucumber were cheaper, while apples, grapes, and kiwifruit pushed up fruit prices."
Other items that contributed to the monthly food price fall included boxed chocolates, chocolate biscuits, and steak.
These falls were partly offset by rising prices for cheddar cheese and instant coffee.
In terms of the annual rise in food prices of 1.3%, butter, milk, and olive oil were key contributors.
Here is the detailed SPI information as supplied by Stats NZ:
30 Comments
At what point does it become cheaper to just drive to the nearest main airport and pay for parking? Eg. If you live in Hamilton, drive to Auckland. If you live in Dunedin, drive to Queenstown. If you live in Nelson, drive to Christchurch. For a single passenger, probably not worth the time and inconvenience, but for a family of four or more it would be substantial savings.
On that note, Jetstar has added another aircraft to its Christchurch route, which will also fly domestic. I've been flying Qantas lately (CHC - BNE) - and recent Air NZ "sale fares" for their seat only option is the same price as Qantas' full service (bags, meals, booze) flights.
I've had exactly that conversation with my spouse. A trip from Napier to Nelson has no quick, cheap options. Cheapest but slowest was to drive to Wellington and ferry over, but that's about 8 hours all up. Quickest but most expensive was a four hour flight (including layover) via Auckland/Wellington/Christchurch. Middle ground was a drive to Wellington, then flight from there. Since only two of us were traveling and time was tight we went with the quick option, but if the whole family was going we'd make a holiday of it and take the ferry.
No airlines care about region to region flights. The flights via AKL/WGN/CHC count (and are charged) as two separate flights.
When Jetstar flew Wellington - Nelson route, they would have regular prices $39-69 depending on the day. Today sounds air have sale flights at $69 each way if you're lucky to get one of the two or 3 seats per flight they offer at that price and the rest go for a rip off.
Interesting take.
How many people are required for a regional flight to occur? A couple of pilots?
Answer, literally hundreds and hundreds. Front of house, engineers, air traffic controllers, the team who trained the air traffic controllers, meteorologists, refuellers, IT and operations staff, airport security, airport/runway fees, aircraft insurance, flight simulator examiners, the doctors that performed the pilots' medical, civil aviation inspectors... I could go on. You can't possibly fathom what a complex operation aviation is. All of these people need their cut from ticket sales.
ANY flight sold at $39-69 is for publicity and is a massive loss for the airline. People who complain about their $200 airfare need to appreciate what narrow margins airlines operate on.
meteorologists, refuellers, operations staff, tech support, airport/runway fees, insurance, flight simulator examiners, the doctors that performed the pilots' medical, civil aviation inspectors
More flights and more bums on seats due to reasonable ticket prices allows greater amortization of those fixed costs, dropping them for everyone. It's not as if the addition of a couple of Jetstar flights during the day meant that extra air traffic controllers had to be hired.
That's not correct. Land your A320 at Invercargill and they'll charge you literally thousands of dollars for the privilege. That's after Airways has billed you a thousand or so for the radar service. You'll then upload something like 15k worth of jet A1. Many costs are not amortized, and changing the schedule by a few % won't make much difference to the fixed costs.
Dec month SPI often has a very large increase (about 40% in 2023 and 2022) in international air fares, which might be enough to put the overall quarterly CPI above the forecast level, even with the roughly 2% weighting . RBNZ would tend to look through this because that dec increase is often unwound in Jan/Feb.
It doesn't matter what my prediction is.
The 7% prediction came from the RBNZ and other banks. As a result, every wage and salary earner, and business, is now planning for additional wage pressure.
The sooner we act to bring down house prices - the sooner our economy will function in a sane way.
Note it will be the medicine required to bring house prices down that rights the ship. i.e. Not house prices in and of themselves. This distinction is critical to understanding NZ Inc.'s malaise.
I believe there is a serious flaw in the table and data. According to it the annual change for petrol is -10.1%. This means with a current price here at the petrol station of 2.729 it was over $3 last year. I don't believe I have ever paid more than $3 for a liter of petrol last year so I seriously doubt this data. Anybody else can confirm this?
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