Food prices surge again

Food prices are soaring once more - climbing 0.8 percent in January, largely on the back on sharp rises in the prices of some fruits and vegetables.

Statistics New Zealand said today that in the year to January food prices increased 9.5 percent. The January rise in prices follows a 0.2 percent drop in prices.

The latest surge will concern the Reserve Bank, which has been aggressively lowering interest rates, from 8.25 percent last July to 3.5 percent as of this month.

The RBNZ has taken the view that inflation will look after itself as low consumer demand due to the recession forces prices down.

However, food price inflation is proving stubborn.

Prices of goods such as milk and cheese have shown only slight falls - after massive increases last year. This is despite the collapse of the international commodities boom and with dairy giant Fonterra taking the pruning shears to its forecast payout to farmers.

SNZ said the fruit and vegetables subgroup rose 3.6 percent in January.

Tomatoes were up 49.5 percent, kiwifruit 48.2 percent, and mandarins 37.3 percent.

Partly offsetting those rises were an 11.3 percent fall in apple prices and a 7.4 percent fall in potato prices.

The non-alcoholic beverages subgroup was up 2.2 percent, grocery food rose 0.4 percent, while restaurant meals and ready-to-eat food were up 0.4 percent.

The only subgroup to fall in January was meat, poultry and fish, which slipped 0.6 percent due to a 9.6 percent drop in the price of lamb.

For the year to January grocery food was up 10 percent, meat, poultry and fish rose 11.8 percent, fruit and vegetables gained 13.4 percent, restaurant meals and ready-to-eat food 6 percent, and non-alcoholic beverages were up 6.9 percent.

Within those subgroups, the most significant contributions to the annual rise were a 20.8 percent increase in bread prices, and a 6.5 percent rise in ready-to-eat food.

with NZPA

- © Fairfax NZ News