Food prices up slightly in May, but annual growth still above 6%

Food prices overall rose 0.3% in May from April, led by a 1% rise in grocery prices, figures released by Statistics New Zealand (Stats NZ) show. The Food Price Index showed that prices were up 6.8% in May from a year ago, although this annual growth rate has been falling steadily since it was 9.5% year-on-year in January. Inflation is now subdued in the eyes of the Reserve Bank, which is now forecasting annual CPI will actually drop below its 1-3% target band later this year temporarily. The 1% rise in the grocery food subgroup was led by a 2.6% rise in the price of bread from April, a 2.9% rise for 'cakes and biscuits', and a 4.2% rise in the price of pasta products. The subgroup was up 7.2% from May 2008, with bread prices up 16.4%. Fresh milk prices were down half a percent from April, and down 1.1% from a year ago. Prices in the 'fruit and vegetables' subgroup fell 2.6% in May from April, its second monthly fall in a row. Annual growth was 3.1%, down significantly from 9.9% in April, and 13.4% in January. "The most significant downward contribution came from lower prices for mandarins (down 45.3%), lettuce (down 18.9%), kiwifruit (down 49.8%), and potatoes (down 6.2%). The most significant upward contribution came from higher prices for broccoli (up 18.7%)," Acting Government Statistician Dallas Welch said. The 'meat, poultry and fish' subgroup index was unchanged from April, although beef and veal prices fell 6.7% , and pork prices fell 4.7%. These were partly offset by a 5% rise in fish and other seafood prices. Annual price growth remained high for the subgroup in May at 11.3%. The index showed a 1.8% price rise for the non-alcoholic beverages subgroup. Annual price growth was 6.7%, down from 7.5% in April, but sill higher than February and March annual growth. The restaurant and ready-to-eat meals subgroup index rose 0.3% from April, with annual growth slowing to 4.9%, from 6.1% in February.