Food prices fall for fourth month in a row; taking some heat off inflation (Update 1)

Food prices fell for the fourth consecutive month in November, led by declines in fruit and vegetable prices as better weather increases supply, figures released by Statistics New Zealand show. (Update 1 includes chart.) Overall prices fell 0.3% over the month, following a 1.5% fall in October, a 0.7% fall in September, and a 0.9% fall in August. The latest figures take some of the heat out of any inflation pressures, leaving the Reserve Bank with more leeway to leave the Official Cash Rate on hold until the middle of 2010. Fruit and vegetable prices fell 2% from October, while other grocery food prices fell 0.2% and non-alcoholic beverages fell 0.8%. Meat, poultry and fish prices rose slightly by 0.1% and milk and cheese prices rose 1.3%, led by a 3.5% rise in yoghurt prices. Overall prices were up 0.9% from November 2008. Annual food price growth has fallen from 10.8% in September 2008. Here is the release from Stats NZ:

Food prices decreased 0.3 percent in the November 2009 month, Statistics New Zealand said today. This is the fourth consecutive monthly fall in food prices, which has not occurred since July 2004. November's fall in the food price index (FPI) was largely driven by lower prices for fruit and vegetables, as occurred in October and September 2009. In November 2009, the fruit and vegetables subgroup decreased 2.0 percent. A fall in vegetable prices (down 6.3 percent) more than offset a rise in fruit prices (up 4.5 percent). "Fruit and vegetable prices usually fall in spring and are now down 17.2 percent from their winter peak in July," said Prices Manager Chris Pike. For the year to November 2009, food prices rose 0.9 percent. This is the smallest annual increase since a rise of 0.9 percent in the year to September 2005. In the year to November 2009, four subgroups recorded increases: non-alcoholic beverages (up 6.9 percent), restaurant meals and ready-to-eat food (up 3.0 percent), grocery food (up 1.5 percent), and meat, poultry, and fish (up 1.0 percent). The fruit and vegetables subgroup fell 7.6 percent in the year to November 2009. Although food prices are now 0.9 percent higher than a year ago, they are 11.4 percent higher than two years ago.