Chocolate, olive oil lead food price rise

Monthly food prices rose 0.6 per cent in April compared to March, an increase one economist said exceeded expectations.

Stats NZ figures showed it was the first food price index rise for three months. The largest contributing group to the rise was grocery food, driven by higher prices for potato crisps, chocolate blocks and olive oil.

The Selected Price Index data was more inflationary than expected, said ANZ economist Henry Russell.

“While overall today’s SPI were on the stronger side of expectations . . . we remain confident that headline inflation will be back within the RBNZ’s 1-3 per cent target band in the third quarter.”

He said the index covered the more volatile components of the CPI basket. On its own, the new data probably won’t have been a big surprise for the RBNZ, said Westpac senior economist Satish Ranchhod.

“However, it follows the March quarter result that was stronger than they had expected. Overall, the RBNZ is looking at a firmer inflation outlook than they had assumed when they last published forecasts in February.”

Looking through the month-tomonth volatility, while lower import prices had pulled down inflation, the data highlighted the continued firmness in domestic prices such as rents, he said.

“As a result, we continue to expect a gradual easing in overall inflation.

Inflation is only likely to drop below 3 per cent late this year, and a return to the 2 per cent target is still a way off.”

The index is a composite of food, travel and accommodation prices. It equates to 45 per cent of the Consumers Price Index inflation rate, which is released every three months.

Cocoa bean and olive oil prices spiked around the world in the last few months with extreme weather causing bad harvests in Africa and southern Europe respectively.

The figures showed fruit and vegetables slightly offset the increase, with cheaper prices for kiwifruit, broccoli, and mandarins.

“Stocking up with fruit and vegetables became cheaper for the third consecutive month,” consumer prices manager James Mitchell said.

“At the same time, filling up the fridge and pantry with other food items, and heading out to a cafe or restaurant became more expensive.”

Food prices increased 0.8 per cent in the 12 months to April 2024.

The latest increase followed a 0.7 per cent increase in the 12 months to March. At the same time last year food prices increased 12.5 per cent.

The smaller increase compared with last year was due to cheaper fruit and vegetables, down 13 per cent in the 12 months to April 2024, while all other broad food groups increased in price.

“The fall in fruit and vegetable prices, compared with April 2023, reflects prices coming down from highs seen throughout 2023,” Mitchell said.