"Food prices in June were influenced by seasonally higher prices for fresh vegetables and higher meat prices"
- Chris Pike, prices manager
New Zealand's Food Prise Index rose at the fastest pace in a year in June, adding to the broader consumer-price inflation and justifying the RBNZ's tightening stance. Food prices rose as much as 1.4% in June month-on-month, after a 0.6% increase in the previous two months. Fruit and vegetable prices jumped 5% in June, while meat, poultry, and fish prices advanced 3.6% in the month. Statistics New Zealand reported food prices were at their highest level since they reached the peak in July 2011. The food-price index is designed to measure price change rate for food and food services purchased by households. Statistics New Zealand visits shops across the country to collect prices for the index and check sizes of packaged goods, including coffee, soft drinks and juices.
With the Reserve Bank of New Zealand's inflation goal lieing between the 1-3% band, the central bank is concerned that non-tradables inflation is rising above safe levels, while tradables inflation, due to the high exchange rates, keeping headline inflation subdued. The RBNZ has already begun taking steps to cool inflationary pressures by raising the Official Cash Rate a total of 75 basis points this year. Economists expect the RBNZ to lift the OCR a further 25 basis points at its July 24 meeting.
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