Economic Week - November 16

by Nick Clark

Food prices down

Food prices fell 0.6% in October 2018 according to Statistics NZ’s monthly Food Price Index.  Although down in nominal terms, when seasonally adjusted food prices rose 0.3%.

Fruit and vegetable prices fell 5.4% for the month but were up 0.2% after seasonal adjustment; meat, poultry, and fish prices rose 2.4% (beef and veal fell 0.4% while mutton, lamb and hogget rose 5.8%); and grocery food prices fell 0.4% (bread and cereals fell 0.2% while milk, cheese and eggs rose 0.2%).

On an annual basis, food prices were up 0.6%. Fruit and vegetable prices were down 5.6% compared to October 2017; meat, poultry and fish prices rose 2.6% (beef and veal unchanged while mutton, lamb and hogget rose 15.0%); and grocery food prices rose 0.6% (bread and cereals fell 1.0% while milk, cheese and eggs rose 3.2%).

Positive outlook for arable farmers

The latest Cereals Report from the Arable Industry Marketing Initiative show unsold stocks of cereal grain reduced by 65% between 1 July 2018 and 10 October 2018 and reduced by 23% compared to the same time last year.

The report also estimated that the total area sown in cereals will be up 2% (or 1,800 ha) on last season, with 84% of the area already sown.

Cuts in unsold stocks and a continued resurgence in hectares sown should bode well for the arable industry this season.

Banking Survey

Federated Farmers’ six-monthly Banking Survey has closed.  Responses are now being analysed.  A big thank you to everyone who took part.  Expect to see the results (including the lucky Mystery Break winner) in a couple of weeks.

NIWA Soil Moisture Data

NIWA’s latest soil moisture maps (as at 9am Thursday 15 November) show it being dryer than usual across most of the North Island (and particularly dray in Northland, Taupo, and Tararua areas) and in Nelson.  Mid and South Canterbury, Otago and Southland are wetter than usual.


 

Exchange Rates

The NZ Dollar was again up over the week against the Trade Weighted Index and up against all the major currencies we trade with.  It has enjoyed a rally over the past month and in most cases (except the US Dollar and the Yen) it is above where it was this time last year.

Wholesale Interest Rates

The 90-day Bank Bill rate and the 10-year Government Bond both edged up slightly over the week. The OCR has been unchanged on 1.75% since November 2016