Food prices edged up 0.1% in December, following a 0.1% drop in November, according to Stats NZ.
The increase in December brought the annual increase in food prices up to 1.5%. On a seasonally-adjusted basis, the food prices rose 0.2% in December following a revised 0.5% seasonally adjusted rise in November.
The information's been released as part of the monthly Selected Price Indexes (SPI) series, which includes items that make up about 45% of the Consumers Price Index, the recognised measure of inflation. The CPI for the December quarter is due to be released on January 22 and the Reserve Bank (RBNZ) is forecasting it will show annual inflation at 2.1%, down from 2.2% in September. The RBNZ aims for inflation in a 1% to 3% range, with an explicit target of 2%.
ASB senior economist Mark Smith said the latest SPI figures were broadly in line with expectations, with prices up 0.5% over Q4.
The monthly figures are consistent with the the RBNZ's 2.1% CPI pick, he said.
"Annual inflation from the monthly [SPI] measure is now trending higher, reducing the risk of annual CPI inflation settling below 2%."
ASB economists expect another 50 basis point cut to the Official Cash Rate by the RBNZ next month - which would take it down to 3.75% and they see a 3.25% OCR "endpoint".
"However, the outlook for 2025 remains incredibility uncertain with the timing and magnitude of OCR moves dependent on outlook and developments over 2025," Smith said.
So, as indicated above, there appears nothing in Thursday's December SPI data to suggest any nasty surprises in next week's CPI release, although the latest release does not include actual rentals for housing data for December 2024. Rentals make up 9.5% of the CPI.
Stats NZ says the administrative data for this information is provided by the Ministry of Business, Innovation and Employment (MBIE). MBIE has recently completed upgrades to their tenancy bond-lodgement system, "and we need more time to integrate this data for the rental price indexes".
"We’re working to integrate this dataset in time for the release of Selected price indexes: January 2025 in February 2025."
Stats NZ will use information previously received on rents for October and November in calculating the rental price input for the December quarter CPI.
But back on the food, the December month saw a 3.1% rise in food and vegetable prices (but these are down 8% across the whole year), while meat, poultry and fish, grocery food and both alcoholic and non-alcoholic drinks saw price falls.
In terms of the whole year higher prices for grocery food and restaurant meals and ready-to-eat food drove the annual increase in food prices, up 2.7% and 3.1%, respectively, Stats NZ said.
The price increase in grocery food was due to higher prices for butter, standard 2L milk, and olive oil.
"The price for a 500g block of butter has increased by about 50% since this time last year, with an average price of $6.66,” Stats NZ's prices and deflators spokesperson Nicola Growden said.
"The same-size block of butter had an average price of $4.48 in December 2023."
Kumara prices, which rocketed in 2023 were around 60% lower in December 2024 than they were 12 months earlier.
The price increase in restaurant meals and ready-to-eat food was due to higher prices for lunch/brunch, hamburgers, and evening restaurant meals.
In terms of some of the other prices in the SPI, international travel prices had their 'normal' gigantic leap in December, rising by some 29.6%, but prices were actually down 10.3% annually. Domestic prices rose just 0.3% in December and were up 2.8% for the year.
Domestic and international accommodation prices both dropped in December.
Although petrol and diesel prices are both down on an annual basis - they both rose in December and these prices will certainly be worth watching in coming months.
Here is the detailed SPI information as supplied by Stats NZ:
Click to view
David Hargreaves, A senior journalist and news editor with interest.co.nz, David Hargreaves has covered financial markets and economics both in New Zealand and Britain for longer than he cares to mention. This article was sourced HERE
The information's been released as part of the monthly Selected Price Indexes (SPI) series, which includes items that make up about 45% of the Consumers Price Index, the recognised measure of inflation. The CPI for the December quarter is due to be released on January 22 and the Reserve Bank (RBNZ) is forecasting it will show annual inflation at 2.1%, down from 2.2% in September. The RBNZ aims for inflation in a 1% to 3% range, with an explicit target of 2%.
ASB senior economist Mark Smith said the latest SPI figures were broadly in line with expectations, with prices up 0.5% over Q4.
The monthly figures are consistent with the the RBNZ's 2.1% CPI pick, he said.
"Annual inflation from the monthly [SPI] measure is now trending higher, reducing the risk of annual CPI inflation settling below 2%."
ASB economists expect another 50 basis point cut to the Official Cash Rate by the RBNZ next month - which would take it down to 3.75% and they see a 3.25% OCR "endpoint".
"However, the outlook for 2025 remains incredibility uncertain with the timing and magnitude of OCR moves dependent on outlook and developments over 2025," Smith said.
So, as indicated above, there appears nothing in Thursday's December SPI data to suggest any nasty surprises in next week's CPI release, although the latest release does not include actual rentals for housing data for December 2024. Rentals make up 9.5% of the CPI.
Stats NZ says the administrative data for this information is provided by the Ministry of Business, Innovation and Employment (MBIE). MBIE has recently completed upgrades to their tenancy bond-lodgement system, "and we need more time to integrate this data for the rental price indexes".
"We’re working to integrate this dataset in time for the release of Selected price indexes: January 2025 in February 2025."
Stats NZ will use information previously received on rents for October and November in calculating the rental price input for the December quarter CPI.
But back on the food, the December month saw a 3.1% rise in food and vegetable prices (but these are down 8% across the whole year), while meat, poultry and fish, grocery food and both alcoholic and non-alcoholic drinks saw price falls.
In terms of the whole year higher prices for grocery food and restaurant meals and ready-to-eat food drove the annual increase in food prices, up 2.7% and 3.1%, respectively, Stats NZ said.
The price increase in grocery food was due to higher prices for butter, standard 2L milk, and olive oil.
"The price for a 500g block of butter has increased by about 50% since this time last year, with an average price of $6.66,” Stats NZ's prices and deflators spokesperson Nicola Growden said.
"The same-size block of butter had an average price of $4.48 in December 2023."
Kumara prices, which rocketed in 2023 were around 60% lower in December 2024 than they were 12 months earlier.
The price increase in restaurant meals and ready-to-eat food was due to higher prices for lunch/brunch, hamburgers, and evening restaurant meals.
In terms of some of the other prices in the SPI, international travel prices had their 'normal' gigantic leap in December, rising by some 29.6%, but prices were actually down 10.3% annually. Domestic prices rose just 0.3% in December and were up 2.8% for the year.
Domestic and international accommodation prices both dropped in December.
Although petrol and diesel prices are both down on an annual basis - they both rose in December and these prices will certainly be worth watching in coming months.
Here is the detailed SPI information as supplied by Stats NZ:
Click to view
David Hargreaves, A senior journalist and news editor with interest.co.nz, David Hargreaves has covered financial markets and economics both in New Zealand and Britain for longer than he cares to mention. This article was sourced HERE
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