Annual Food Prices Up Despite Monthly Fall

According to Stats NZ, food prices have fallen for the first time since February but remain significantly higher than this time last year. 

Cheaper fruit and vegetable prices drove the fall in October, with overall food prices dropping by 0.9 percent for the month compared to September. 

October's movement was the first fall since February when prices also fell 0.9 percent. After adjusting for seasonality, prices fell 0.1 percent in October. 

Although fruit and vegetables prices were down in October, economists say it was still nine percent higher than last year, and meat prices are likely to come under pressure. 

Fruit and Vegetables Main Contributor to Monthly Fall

Fruit and vegetable prices dropped 5.9 percent in October, with prices down for tomatoes (26%), iceberg lettuce (23%), capsicums (22%), and cucumbers (25%). These downfalls were partially offset by the increase in kiwifruit (41%), broccoli (9.8%) and carrots (9.5%). 

However, tomatoes, lettuce, capsicum and cucumber prices were all still higher than they were in October last year. 

After adjusting for seasonal effects, fruit and vegetable prices fell 0.2 percent in October. 

"The small movement in the seasonally adjusted series for fruit and vegetables indicates that most of the 5.9 per cent fall in the non-seasonally adjusted series was due to seasonality," said consumer price manager for Stats NZ, Katrina Dewbery. 

Prices for non-alcoholic beverages fell by 1.6 percent in October, pushed by lower prices for 1.5L soft drinks, which were down by 6.8 percent. 

Meat, poultry and fish prices also fell in October, with lower prices for chicken pieces and roasting pork. 

Annual food prices up nearly 4%

On an annual basis, food prices increased 3.7 percent in October 2021, mainly due to higher prices for restaurant meals and ready-to-eat food (5%), fruit and vegetables (9%) and grocery food (3.1%). 

"October's annual movement is slightly lower than September's 4.0 per cent increase but still higher than the average annual increase over the last year of 2.3 per cent," Dewbery said.

Infometrics senior economist Brad Olsen said although food prices were down in October from September, it was not an unusual seasonal fall, with October 2018, 2019 and 2020 down as well. 

As we head into summer, the season will see fruit and vegetable prices driven lower. However, food prices are still up nearly 4% from last year, and some look to continue to rise, said Olsen. Notably, fruit and vegetable prices are still up nine percent from last year, meaning household budgets are still under pressure.