NZ: Seasonal prices reduce food bills

New Zealand food prices have fallen, as cheaper cheese and seasonal fruit and vegetables offset rising meat prices.

The food price index fell 0.8 per cent in September, after rising 0.3 per cent in August, according to Statistics New Zealand.The index was 0.1 per cent lower than it was in September 2013, as supermarket discounting of bread led to cheaper groceries.

The cost of food makes up about 19 per cent of the consumer price index, a measure of inflation in the economy.

Softer than expected inflation readings led to Reserve Bank governor Graeme Wheeler keeping the official cash rate on hold at 3.5 per cent in September, after lifting it from 2.5 per cent since March.

"Over the past year, food prices have largely remained flat," Christina Leung, an economist at ASB Bank, said in a note. "The result adds to other inflation indicators pointing to a contained inflation environment. With little urgency for the RBNZ to resume its tightening cycle, we continue to expect the RBNZ will keep the OCR on hold at 3.5 per cent until March 2015."

In September fruit and vegetable prices fell 6.5 per cent, with vegetables dropping 11 per cent led by lettuce, tomatoes, cucumber and capsicum.

On an annual basis, fruit and vegetable prices decreased 3.3 per cent in September and grocery food prices fell 1.6 per cent, led by bread as supermarkets ran discount offers, Statistics NZ said.

Source: news.com.au