Food price hikes stall, thanks to lowered cost of fruit and veges

Tumbling fresh food prices are helping to keep the brakes on consumer inflation.

Stats NZ said food prices rose 0.7 percent for the year ended March, the lowest since May 2021, as fresh produce – notably salad items – dipped more than 13 percent.

The annual decrease in fruit and vegetables was the largest in the 25-year history of the data, but was being countered by rises in groceries, takeaway meals and soft drinks.

“Visiting a café or restaurant, or getting takeaways was more expensive in March 2024,” Stats NZ consumer prices manager James Mitchell said.

Eating out cost 6.4 percent more than a year ago, and alcohol and tobacco were up 7.5 percent.

“The cost of buying a box of beer bought off-licence was 10 percent more expensive than a year ago, while a pint of beer at a bar or restaurant was 6 percent more expensive,” Mitchell said.

And a raft of other items in the consumer price index (CPI) also showed solid increases, with rents up 4.6 percent, a 14.6 percent rise in petrol prices, and 4 percent rise in hotel and motel accommodation.

ASB senior economist Mark Smith said the partial price measures suggested inflation might have been a touch stronger at the start of the year, although the annual number should slow from 4.7 percent at the end of last year to just above 4 percent for the year ended March.

“At this stage, we continue to expect CPI inflation to fall below 3 percent by year-end, but only just. Of more market relevance will be developments in core inflation.”

“Our expectation is that core inflation will continue to cool and that the RBNZ will be sufficiently confident to cut the OCR when the core inflation trajectory points to generalised inflation settling below 3 percent.”