Food price rise slows to 1.3% in February

Press, 11 March 1985, Page 1

Food price rise slows to 1.3% in February

By

MICHAEL HANNAH

in Wellington

A sign that food price inflation has started to slow may be reflected in the 1.3 per cent rise in food prices in February, announced yesterday.

The 1.3 per cent over-all monthly rise compared with a 2.4 per cent increase in January, the highest surge in food prices in nearly five years. Although the Government was pleased with the February rise, it is unlikely to appease the Opposition, which sees it as still another rise on top of a hefty increase the previous month. To drive its message home, the Opposition plans to compare a supermarket “shopping basket” list of groceries next week with earlier baskets it has bought. The latest rise in Febru-

ary meant that food cost 13.5 per cent more than a year earlier, compared with an annual rise of 11.4 per cent in January. The monthly rise, however, will be that much more welcome to the Government as it was half the increase predicted by the private economist, Mr Len Bayliss, who believed food price inflation could peak at 2.6 per cent in February. Mr Bayliss and Government spokesmen then expected that the effects of last year’s devaluation would still be flowing through into food prices in February, but the outcome suggests the impact of devaluation has

spent itself sooner than was expected. What the latest food price index means for general price movements, as measured by the consumers’ price index, is difficult to say. Food prices are measured every month, while the general index comes out every three months, the next due at the end of March. In the last index, measured in December, food price rises contributed only about 16 per cent of the total movement of the index, and were outweighed by increased housing and transport costs.

The latest rise may be also only a brief respite between the flow-on effects of devaluation and of the imminent rises in Government charges for transport and energy and the removal of subsidies on milk and farm inputs such as fertiliser.

The biggest rises last month were posted on coffee, margarine, ice-cream, confectionery, meals away from home, and take-away food in the “other food” category. This category contributed 53.6 per cent, or more than half, of the 1.3 per cent over-all price increase.

In particular, consumers paid an extra 2.7 per cent for beverages; 1.4 per cent for soft drinks, fruit juices and ices; and 2.7 per cent for sweets, potato chips, and peanuts. Meals away from home cost another 0.9 per cent than a month earlier, while take-aways cost an extra 0.8 per cent.

Fresh fruit and vegetables cost a further 2.5 per cent in the month, and processed fruit prices rose 1.4 per cent. Meat prices increased 1.5 per cent, mostly for beef, smallgoods, and prepared meat items. The only drop in prices occurred in poultry, where prices fell 1.5 per cent.

Over the whole year, prices of staple food items rose close to the over-all price rise of 13.5 per cent, with fresh fruit and vegetables up 13.1 per cent; processed fruit, 11 per cent; meat, 10 per cent; soft drinks, fruit juices, and ices, 12.7 per cent; and other nonspecific grocery food, 13.3 per cent. Consumers would have noticed the biggest price increases on beverages (39.6 per cent); fish (20.2 per cent); sweets, potato chips, and peanuts (18.9 per cent); take-aways (18 per cent); meals away from home (16.9 per cent); and cereals and cereal products (14.6 per cent). Lower than average price rises occurred on processed vegetables (7.6 per cent), poultry (4.9 per cent), eggs (8.5 per cent), dairy products (8 per cent), and jams and spreads (8 per cent).