Food Price Index: October 2009

Food prices in October 2009

Food prices fell 1.5 percent in October 2009, following decreases of 0.7 percent and 0.9 percent in September and August 2009, respectively. This is the third consecutive fall in the food price index (FPI), and the largest fall in seasonally unadjusted food prices since they fell 1.5 percent in February 2006.

In October 2009, for the first time this decade, all five food subgroups recorded decreases. Lower prices were recorded for fruit and vegetables (down 4.6 percent), meat, poultry, and fish (down 3.2 percent), grocery food (down 0.4 percent), restaurant meals and ready-to-eat food (down 0.3 percent), and non-alcoholic beverages (down 0.4 percent).

The most significant individual downward contributions came mostly from lower prices for lettuce (down 47.0 percent), fresh chicken (down 8.7 percent), and lamb (down 11.8 percent).

The most significant upward contributions came from higher prices for broccoli (up 37.9 percent), carrots (up 19.2 percent), and cabbage (up 53.1 percent).

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Distribution of item-level movements

The table below outlines the distribution of price movements in September 2009 and October 2009. The FPI has been partitioned into those national item-level indexes that increased, showed no change, or decreased.

• the percentage of expenditure weight of items that increased in price fell slightly, as did the percentage of expenditure weight of items that decreased in price.
• the weighted average price decrease rose while the weighted average price increase fell.
• the weighted average price decrease was more than double the weighted average price increase.

Annual movements

Food prices increased 2.0 percent in the year to October 2009, following increases of 3.3 percent and 4.6 percent in the years to September and August 2009, respectively. The October 2009 annual increase is the lowest annual increase since a 1.8 percent rise in the year to May 2006. This is the third month in a row where the annual increase has been lower than the month before.

Four of the food subgroups increased in the year to October 2009. The most significant upward contributions came from higher prices for grocery food (up 2.7 percent), followed by non-alcoholic beverages (up 9.8 percent), restaurant meals and ready-to-eat food (up 3.0 percent), and meat, poultry, and fish (up 1.2 percent).

The only subgroup to decrease was fruit and vegetables (down 6.0 percent).

The most significant upwards contribution came from higher prices for soft drinks (up 10.5 percent), ready-to-eat food (up 3.0 percent), and bread (up 7.2 percent).

The most significant downward contributions came from lower prices for potatoes (down 29.5 percent), cheddar cheese (down 23.1 percent), and lettuce (down 32.4 percent).

Although food prices are now 2.0 percent higher than a year ago, they are 12.1 percent higher than two years ago.

Fruit and vegetables

Prices for the fruit and vegetables subgroup decreased 4.6 percent in October 2009, following decreases of 8.4 percent and 3.3 percent in September and August 2009, respectively. Fruit and vegetable prices, which usually fall over the spring months, are now down 15.5 percent from their winter peak in July 2009.

The most significant downward contribution to the October 2009 fall came from lower prices for lettuce (down 47.0 percent). Lower lettuce prices accounted for over three-quarters of the 4.6 percent fall in the price of fruit and vegetables in October 2009. Prices for cucumber (down 34.6 percent) and tomatoes (down 7.2 percent) also fell. The most significant increases came from broccoli (up 37.9 percent), carrots (up 19.2 percent), and cabbage (up 53.1 percent).

For the year to October 2009, fruit and vegetable prices decreased 6.0 percent. Vegetable prices were down 8.3 percent and fruit prices were down 2.4 percent for the year to October 2009. This was the first annual fall in fruit prices since the year to May 2008.

The most significant downward contributions came from lower prices for potatoes (down 29.5 percent), lettuce (down 32.4 percent), and apples (down 16.0 percent). The most significant upward contribution came from higher prices for bananas (up 8.4 percent).

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Meat, poultry, and fish

Prices for the meat, poultry, and fish subgroup decreased 3.2 percent in October 2009, following a rise of 1.8 percent in September 2009, and a fall of 0.4 percent in August 2009. This is the largest fall since a 3.6 percent decrease in May 1986.

The most significant downward contributions to the October 2009 fall came from lower prices for fresh chicken (down 8.7 percent), lamb (down 11.8 percent), and prepared meats and smallgoods (down 4.6 percent). The most significant increase came from frozen chicken (up 7.5 percent). Poultry was down 5.2 percent, and its prices have returned to levels last seen in August 2008.

Minced beef prices fell 5.9 percent in October 2009, with a significant amount of specialling, following its 6.8 percent increase in the previous month.

For the year to October 2009, meat, poultry, and fish prices rose 1.2 percent. The most significant upward contributions came from higher prices for sausages (up 9.7 percent) and canned tuna (up 20.9 percent). The most significant downward contributions came from lower prices for beef (down 4.6 percent) and poultry (down 2.9 percent).

Other subgroups

Slightly lower prices were recorded for the grocery food (down 0.4 percent), restaurant meals and ready-to-eat food (down 0.3 percent), and non-alcoholic beverages (down 0.4 percent) subgroups.

For the first time this decade, the grocery food subgroup has decreased for three months in a row. Grocery food prices have returned to about the same level recorded in May 2009. The restaurant meals and ready-to-eat food subgroup has recorded its first monthly fall since April 2003.

Within these subgroups, the most significant downward contributions in October 2009 came from lower prices for ready-to-eat food (down 0.7 percent) – driven largely by takeaway salad (down 11.9 percent) where there was significant specialing – and soft drinks (down 1.3 percent). The most significant upward contribution came from higher prices for cakes and biscuits (up 1.8 percent).

For the year to October 2009, cheddar cheese (down 23.1 percent), fresh milk (down 4.5 percent), and butter (down 27.0 percent) have all decreased in price from their peaks of a year ago, returning to levels last seen at the end of 2007 or early 2008.

For technical information contact:
Cindy Qin or Daniel Griffiths
Wellington 04 931 4600
Email: info@stats.govt.nz

Next release ...

Food Price Index: November 2009 will be released on 11 December 2009.