Rate of food price increase slows

Press, 10 August 1985, Page 3

Rate of food price increase slows

By

MICHAEL HANNAH

in Wellington

Food price rises slowed in July to 0.6 per cent, cheaper fruit and vegetables making up for big increases in the cost of general grocery items.

Figures given yesterday showed the annual rate of inflation for food also dropped in July, to 15.8 per cent, compared with 16 per cent in June.

The Government took heart from the latest figures from the Government Statistician, but a political argument brewed over the fact that grocery bills in the last year have risen at 2Vz times the rate they increased a year earlier. Clearly food prices have soared since the Labour Government melted the price freeze completely last November allowing the higher costs arising mainly from the 20 per cent devaluation last July to feed through into grocery bills. In January this year, food prices shot up 2.4 per cent, and then in March 2.5 per cent, the highest figure for exactly five years. But for the last three months, shoppers will have seen grocery price rises simmer down to a level they were familiar with early last year, when the National Government allowed the lid partly off the freeze in February, 1984. For the last three months, food prices have increased

0.6, 0.7 and 0.6 per cent. After the price freeze was lifted partly in February, 1984, food prices rose an average of about 0.8 per cent until the General Election and subsequent de-, valuation in July. For a time when it cost even less to eat, one has to go back to the period of total freeze on prices and wages, which resulted in monthly price rises of less than 0.5 per cent. That was back in 1983, and the full effect of the freeze was felt in February, 1984, with a drop in prices just before the Government allowed prices to go up under surveillance.

It is because of the freeze that Opposition spokesmen were able yesterday to point to the 15.8 per cent rise in food prices in the July year as being 2% times the rate of inflation a year earlier. The annual food price inflation rate in July, 1984, at 6.2 per cent, included the effects of seven months of total freeze on prices. The Minister of Trade and Industry, Mr Caygill, said yesterday that the latest figures were good news. He noted that in the last three months food prices had risen a total of 1.9 per cent, compared with 5.6 per cent for the three months to April. “This suggests that the rate of increase in prices generally has indeed levelled off, as the Govern-

ment predicted it would from about the middle of this year,” he said. Mr Caygill said the July increase had occurred in spite of significant increases in the price of butter and sugar. These rises were countered by a fall in the price of fresh fruit and vegetables during July. “In fact, the price of fresh fruit and vegetables has now been falling for each of the last three months,” he said.

However, the Opposition spokesman on trade and industry, Mr Jim Bolger, was not impressed. He noted that the family’s weekly shopping basket was increasing in price 2% times as fast in 1985 compared with 1984. The increase of 15.8,per cent for the July year confirmed yet again that wages were falling further behind price increases under the Lange Labour Government, Mr Bolger said. The New Zealand Democratic Party spokesman on consumer affairs, Mr Alasdair Thompson, also noted the faster rise in food prices this year compared with last year. He maintained that rises in the price of basics such as sugar, butter and eggs, which rose steeply early in the month, had not fed through into other food prices yet. “Any lull in food price increases during July is, unfortunately, going to be shortlived,” he said.