Economic week

February 17
by Nick Clark

Food prices increased 2.8 percent in January according to Statistics NZ’s monthly Food Price Index

The increase was mainly led by fruit (up 11.9 percent) and vegetables (up 5.9 percent) but there were solid increases across most categories. 

Meat, fish and poultry prices were up 2.4 percent, with sheepmeat up 10.7 percent and beef up 0.5 percent. 

Grocery foods were also up 2.4 percent with milk, cheese and eggs up 2.8 percent and within that fresh milk up 4.4 percent.

Food prices, especially for fruit and vegetables, can be highly volatile depending on the season and growing conditions. Taking seasonality into account the month-on-month seasonally adjusted food price increase was a more modest 0.9 percent. On an annual basis, comparing January 2017 with January 2016, food prices were up 1.4 percent.  Vegetable prices were the big upward mover, (up 7.3 percent) but fruit prices were down 2.3 percent. 

Meat, poultry and fish prices were down 1.1 percent, although sheepmeat was up 4.1 percent and beef up 2.3 percent (poultry and pork both down).  Grocery food was up 1.8 percent, with milk, eggs and cheese up 2.5 percent and within that fresh milk up 5.6 percent.

The Real Estate Institute’s latest Rural Statistics showed that there were 521 farms sold over the three months to January 2017, down 2.1 percent compared to the same period last year.  Overall there were 1,749 farms sold for the year ended January 2017, down 3.2 percent on the previous year.

Median sales price per hectare for the three months to January 2017 was $27,058, down 1.2 percent compared to the same period last year.  However, the RIENZ All Farms Price Index, which adjusts for farm size, location and type, was up 4.1 percent compared to January 2016.

The Government books are looking in better shape than expected, according toits financial Statements for the Six Months Ending 31 December 2016.   The operating balance before gains and losses was a surplus of $9 million in the six months ended December 31, compared with a forecast deficit of $666 million in the Treasury's Half Year Fiscal and Economic Update published last December.

This difference was largely due to core Crown revenue being 0.9 per cent more than forecast at $35.4 billion while core Crown expenses were 0.8 per cent below forecast at $38.1billion. 

Gross Crown debt was also $1.6 billion below forecast and Crown net worth $3.6 billion above forecast.

There is still uncertainty around costs associated with the Hurunui-Kaikoura earthquake but overall the outlook seems positive for achieving an operating surplus this year.