New data from Stats NZ shows average household costs went up 6.2 per cent in the last year. Photo: LDR / Alka Prasad
- Surging dairy and meat prices drive grocery prices
- Cheaper fuel, accommodation, fuel prices
- Rental inflation lowest snce 2011
Food prices have risen at their fastest rate in 18 months on the back of strong dairy and meat prices.
Stats NZ's food price index rose 0.5 percent last month on April, compared to April's 0.8 percent monthly rise.
The annual rate increased to 4.4 percent from 3.8 percent, the highest since December 2023.
"All five food groups recorded an annual price increase in May," prices and deflators spokesperson Nicola Growden said.
Meat, poultry and fish had the biggest annual increases for the index, while butter, milk and cheese drove grocery prices.
"The cost of a 500 gram block of butter is nearly twice as expensive as the lower prices seen in early 2024," Growden said.
The average price for butter was $8.42 per 500g, up 51 percent over the past year, with cheese up 30 percent.
The increase in the meat, poultry, and fish group was driven by higher prices for beef, with double digit increases for steak and mince.
High export prices for dairy and meat product have lifted local prices.
For the month of May, higher prices for fruit and vegetables -- notably tomatoes, avocados, and cucumber -- and meat were the main drivers of the increase.
Other services and goods surveyed showed that rose were power and accommodation, while fuel and airfares were cheaper.
Rents rose 2.8 percent over the 12 months, which was the slowest annual increase since 2011.
The various price moves account for just under half of the consumer price index, and Westpac senior economist Satish Ranchhod said food was likely to lift headline inflation in the near term.
He raised the forecast for second quarter inflation to 0.6 percent, for an annual rate of of 2.8 percent.
"Under the surface, domestic (non-tradables) inflation is easing, but only gradually."
Energy costs and likely local body rate rises were also likely to underpin price pressures.
"Notably the high food prices, which are boosting agricultural incomes, are also being felt at the checkout. That's pushing tradables inflation back to firm rates after last year's falls," Ranchhod said.
"Importantly, it looks increasingly likely that inflation will rise back to the top of the RBNZ's target band before year end."
A higher inflation rate would support the argument for the Reserve Bank to remain cautious about the speed and extent of future interest rate moves.
