13 Jul 2010

Biggest food price increase this year

8:56 pm on 13 July 2010

Food prices recorded their biggest monthly increase so far this year in June.

Higher prices for meat, fruit and vegetables pushed up the Food Price Index by 1.3% in June - following a fall of 0.7% in May.

Fruit and vegetables jumped 9.3%, due to the weather, following price declines since February.

Meat prices rose 2.7% in June after falling in April and May, due to higher numbers of animals slaughtered because of the drought.

Prices for non-alcoholic drinks and groceries fell during the month.

Food prices had been falling since last July, but economists say rising prices for farm exports could push them back up.

Food prices comprise nearly 18% of the Consumer Price Index, which is due to be released on Friday.

Economists expect the cost of food to remain volatile for a while, but they are not adjusting their inflation expectations.

ASB says it is still forecasting the CPI to rise 0.4% in the three months to June.

The bank's chief economist, Nick Tuffley, expects food prices to remain volatile over the cooler winter months.