Statistics New Zealand figures show overall food prices decreased 0.1 per cent in the year to June 2015.
This follows eight consecutive food price increases since the year to October 2014.
But lower priced fresh milk and bread led to a 2.1 per cent decrease in grocery food prices for the year.
In June, the price of fresh milk was down 2.6 per cent.
Compared to June 2014, the price of fresh milk was down 6.7 per cent.
Consumer NZ chief executive Sue Chetwin said international dairy auction prices had been dropping for the past year and until now it had not been reflected in the price of milk.
«It’s good news for consumers across the board but particularly for the price of milk and we would hope to see the trend for lower prices continue,» she said.
Statistics New Zealand’s Matt Haigh said the price of fresh milk was the lowest since August 2013, when 2 litres of blue-top cost $3.17.
«The average price for 2 litres of blue-top milk was $3.36 in June, down 9.4 percent from its peak in November 2014.»
ASB senior economist Jane Turner said the pass through between retail dairy prices from global commodity prices was generally quite slow and muted.
One reason for this was other factors that contribute to the cost of the final retail product, such as distribution, wages and other overheads.
Over late 2013 and early 2014, retail dairy prices were slower to lift than wholesale dairy commodity prices. As a result, consumers were largely protected from stronger global dairy prices during this period, she said.
«During late 2014, retail dairy prices were slow to fall, remaining quite elevated until recently.»
There was scope for further declines in retail dairy prices.
However, given the recent decline in the New Zealand dollar is expected to lift export returns, any further decline in retail prices was likely to be limited, she said.
Westpac senior economist Michael Gordon said the recent substantial exchange rate change had put pressure on some products but not for all foods.
Fresh milk prices were less likely to be impacted by the dollar than exported butter, cheese and milk powder.
The figures showed food pricing inflation remained soft, he said.
The second-quarter inflation data would be released on Thursday.
The central bank is expecting an annual consumers prices rise of 0.3 per cent, however Westpac predicted a 0.5 per cent increase, he said.
Meanwhile, the price of fruit had increased during the year by 5.3 per cent.
Prices for meat, poultry, and fish also decreased – down 1.9 per cent from June 2014.
Year-on-year, the price of chicken was down 7.9 per cent, processed meat was down 3.6 per cent, and lamb was down 6.2 per cent.
For the month of June, the price for chicken was down 7.1 per cent – the lowest level since May 2014.
Prices also fell for cheese, butter cakes and biscuits but was offset by higher prices for chocolate, which was up up 8.3 per cent.
Seasonally higher prices for winter fresh fruit and vegetables in June pushed monthly food prices up 0.5 per cent but after adjusting the figures for seasonal increases for items such as tomatoes and lettuce, prices actually fell 0.8 per cent June, Haigh said.
The figures show non-alcoholic beverages were up 4.1 per cent, which was influenced by higher prices for energy drinks.
Prices for restaurant meals and ready-to-eat food were up 1.9 per cent.
Source: Stuff
