Food Prices Higher But Aggregate Close To Flat In June

June prices for around 45% of the NZ CPI basket were released today and while many of the series are volatile, such as food and fuel, as an aggregate they were close to flat on the month. Q2 CPI prints on July 17 and will be watched closely.

• Headline food prices rose 1% m/m to be down 0.3% y/y after +0.2% y/y, the lowest since July 2016 but the annual decline is driven by base effects from the volatile fresh fruit & vegetables component which was boosted last year by storms, as without them food prices rose 2.3% y/y.
• The domestic demand- and wage-impacted restaurant and takeaway food series continued to moderate from its 9.2% y/y peak a year ago to 4.0% in June but it continues to post monthly increases. Grocery food price inflation picked up to 2.3% y/y from 1.3% in May.
• While existing rents rose 0.3% m/m in June to be up 4.5% y/y, new rentals fell 1.2% m/m to be up 2.5% y/y. The latter series is more volatile but it is a tentatively good sign that it is running below the existing series.
• In terms of other data released, petrol prices fell 4.6% m/m to be up 11.6% y/y. Domestic air travel fell 0.5% m/m and 4.2% y/y while international rose 4% m/m but is down 11.3% y/y. Alcohol & tobacco rose 0.1% m/m to be up 6.5% y/y. Accommodation was down on the month but domestic is down 3.9% y/y while overseas rose 2.8% y/y.