Data Flash (New Zealand)
Key points
The food price index rose a 1.5% mom rise in January (the market expectation was for a 0.8% rise).
Nonetheless, the annual rate of food price inflation declined from 5.8% in December to 5.6% in January.
The overall result was driven by a sharper than expected rise in fresh fruit and vegetable prices (+10.1% mom). A
significant rise had been expected as a result of poor weather prior to Christmas.
Excluding fresh produce, food prices rose 0.6% mom. Meat prices appear to have stabilised, rising just 0.2% mom.
However, general grocery prices rose 0.7% mom (the proportion of items moved off special was greater than the proportion
moving on special) while restaurant and ready-to-eat food prices rose 0.5% mom.
Comment
Our preliminary forecast for the Q1 CPI is +0.7% qoq (the RBNZ forecast 0.6% qoq in its November MPS). This result would
see the annual inflation rate rise from 1.8% to 2.7% (this reflects the dropping out of the low Q1 2001 result - a fall
of -0.2% qoq - from the annual calculation).
Darren Gibbs, Senior Economist