Food Price Index: May 2012

• Food prices rise in May 2012 
• Food prices fall for the year to May 2012 
• Fruit and vegetables prices rise
• Cheaper fresh milk helps lower grocery food prices 
• Meat, poultry, and fish subgroup falls, partly due to more discounting 
• Summary of other food subgroup movements  
• Impact of items that rose and fell in price 

Food prices rise in May 2012

Food prices rose 0.3 percent in May 2012, following decreases of 0.1 percent in April and 1.0 percent in March 2012.

In May 2012, higher prices were recorded for fruit and vegetables (up 3.2 percent), non-alcoholic beverages (up 2.2 percent), and restaurant meals and ready-to-eat food (up 0.7 percent).

Lower prices were recorded for meat, poultry, and fish (down 1.5 percent) and grocery food (down 0.5 percent).

The main upward contribution to the food price index (FPI) came from seasonally higher prices for tomatoes (up 58 percent). Higher prices were also recorded for soft drinks (up 2.5 percent), cucumber (up 70 percent, due to seasonality), cakes and biscuits (up 3.3 percent), and bread (up 2.4 percent).

The main downward contributions came from lower prices for fresh milk (down 5.7 percent), and seasonally lower prices for kiwifruit (down 51 percent) and mandarins (down 31 percent). Butter prices also fell (down 14 percent). 
 

Food prices fall for the year to May 2012

Food prices decreased 0.2 percent in the year to May 2012. This followed no overall change in the year to April and an increase of 0.2 percent in the year to March. The May 2012 annual decrease is the first annual fall since the year to August 2010 (when prices were down 0.2 percent).

Three subgroups made downward contributions to the latest annual decrease: meat, poultry, and fish (down 2.3 percent), grocery food (down 0.2 percent), and non-alcoholic beverages (down 0.7 percent).

The remaining two subgroups recorded annual increases: restaurant meals and ready-to-eat food (up 1.6 percent), and fruit and vegetables (up 0.2 percent).

The key downward contribution for the year came from lower prices for fresh milk (down 7.2 percent). Lower prices were also recorded for:

• cheddar cheese (down 15 percent) 
• lettuce (down 29 percent)
• butter (down 25 percent)
• potatoes (down 13 percent)
• fresh chicken pieces (down 5.3 percent)
• bacon (down 8.7 percent).

The main upward contributions for the year came from higher prices for tomatoes (up 14 percent), nuts (up 21 percent), and cracker-type biscuits (up 15 percent).

Fruit and vegetable prices rise

Prices for the fruit and vegetable subgroup rose 3.2 percent in May 2012. Vegetable prices rose 8.4 percent while fruit prices fell 3.2 percent.

The most significant upward contribution came from seasonally higher prices for tomatoes (up 58 percent). Seasonally higher prices were also recorded for cucumber (up 70 percent), capsicums (up 20 percent), avocados (up 16 percent), and courgettes (up 49 percent). The most significant downward contributions came from seasonally lower prices for kiwifruit (down 51 percent) and mandarins (down 31 percent).

In the year to May 2012, prices for the fruit and vegetables subgroup increased 0.2 percent. Fruit prices increased 2.9 percent while vegetable prices decreased 2.5 percent.

The most significant upward contributions came from higher prices for tomatoes (up 14 percent), kumara (up 41 percent), capsicum (up 32 percent), and mandarins (up 27 percent). Prices for kiwifruit (up 28 percent) were also higher for the year to May 2012.

The most significant downward contributions came from lower prices for lettuce (down 29 percent), potatoes (down 13 percent), and onions (down 27 percent).

Cheaper fresh milk helps lower grocery food prices

Grocery food prices fell 0.5 percent in May 2012, their third consecutive monthly decrease.

The main downward contribution came from fresh milk (down 5.7 percent). This is the biggest decrease in fresh milk prices since a decrease of 8.1 percent in September 2006. Fresh milk prices are now 7.4 percent below their February 2011 peak and are at their lowest recorded level since June 2010.

Lower prices were also recorded for chocolate (down 4.4 percent), butter (down 14 percent), and cheddar cheese (down 4.1 percent). Butter prices are now 28 percent below their June 2011 peak.

The main upward contributions came from higher prices for bread (up 2.4 percent) and chocolate biscuits (up 6.1 percent), influenced by less discounting in May than in April.

For the year to May 2012, grocery food prices decreased 0.2 percent. This is the first annual fall in grocery food prices since a fall of 0.7 percent in the year to July 2010. The most significant downward contribution came from lower prices for fresh milk (down 7.2 percent). Lower prices were also recorded for cheddar cheese (down 15 percent) and butter (down 25 percent).

This is the fourth month in a row that fresh milk prices have had an annual fall. The fall in fresh milk prices for the year to May 2012 is their largest annual fall since the year to June 2007 (when prices were down 11 percent). Butter prices have had annual falls for the past seven months. The fall for the year to May 2012 is butter's largest annual fall since the year to December 2009 (when it fell 28 percent).

The main upward contributions for the year came from nuts (up 21 percent), cracker-type biscuits (up 15 percent), and ice cream and edible ices (up 4.8 percent).

Meat, poultry, and fish subgroup falls, partly due to more discounting

In May 2012, meat, poultry, and fish prices fell 1.5 percent. Lower prices were recorded for ham (down 7.5 percent), sausages (down 4.1 percent), corned beef (down 14 percent), porterhouse/sirloin beef steak (down 2.7 percent), and bacon (down 3.9 percent). The fall in prices for these items was due to more discounting in May 2012 than in April 2012.

On an annual basis, prices for meat, poultry, and fish decreased 2.3 percent. The main downward contributions came from lower prices for fresh chicken pieces (down 5.3 percent), bacon (down 8.7 percent), frozen chicken (down 9.0 percent), and corned beef (down 17 percent).

Summary of other food subgroup movements

Higher prices were recorded in May 2012 for non-alcoholic beverages (up 2.2 percent) and restaurant meals and ready-to-eat food (up 0.7 percent).

The higher prices for non-alcoholic beverages were due to less discounting on soft drinks (up 2.5 percent) and tea (up 6.9 percent). Soft drinks accounted for most of the rise in non-alcoholic beverage prices.

The restaurant meals and ready-to-eat food subgroup was influenced by small increases for most items in this subgroup.

For the year to May 2012, prices for the restaurant meals and ready-to-eat food subgroup increased 1.6 percent while non-alcoholic beverage prices decreased 0.7 percent.

Impact of items that rose and fell in price

The graph below shows how the items that rose and fell in price affected the FPI.

Comparing May 2012 with April 2012, the items that rose in price had a larger impact than in April, while the impact of items that fell in price was slightly smaller. This led to a rise of 0.3 percent in the FPI.

The following table outlines the distribution of price movements in April and May 2012. In the table, the FPI is divided into three categories at the national item-level: those that increased, those that showed no change, and those that decreased.

For more detailed data from the FPI see the Excel tables in the 'Downloads' box.