New Zealand food-price inflation slows to 14-month low

NEW Zealand food-price inflation slowed to a 14-month low in September, adding to signs that a cost-of-living crisis may be starting to ease.

Food prices rose 8 per cent from a year earlier, Statistics New Zealand said on Thursday (Oct 12) in Wellington. That’s down from 8.9 per cent in August and the slowest pace since July last year. From a month earlier, prices fell 0.4 per cent.

Soaring produce, meat and grocery costs have brought additional stress on households already encumbered by expensive fuel and rising home loan interest payments. Food inflation climbed to as high as 12.5 per cent in the year through April.

“Soft household demand and greater consumer resistance to paying higher food pricing might be impacting food retail pricing decisions,” said Mark Smith, senior economist at ASB Bank in Auckland. “Resistance to higher prices and lower global food price inflation will see food price inflation continue to slow from here.”

The pressure on living costs is a significant issue ahead of a general election on Oct 14, with the ruling Labour Party pledging to remove sales tax from fruit and vegetables to relieve some of the price pressure.

Today’s report showed fruit and vegetable prices fell 3.9 per cent from August and rose just 1.4 per cent from September last year. Grocery food was unchanged in the month but surged 10.7 per cent from a year earlier.

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A report on third-quarter consumer price index inflation is scheduled for Oct 17. Provisional estimates from economists suggest annual headline inflation will be about 6 per cent, matching the second-quarter pace.

The Reserve Bank of New Zealand (RBNZ) last week said rising global oil prices could increase domestic costs over coming months and there was a risk that headline inflation could be higher than expected. The RBNZ has said it wants interest rates to remain restrictive for a sustained period of time to get inflation back to its 1 per cent to 3 per cent target. BLOOMBERG