Food prices in January rose the largest for a single month in two and a half years, driven by beef, milk and oil.

According to the latest Stats NZ Selected Price Index, food prices increased 1.9% in January compared with a 0.1% increase in December.

This was the largest monthly rise in the cost of food since a 2.1% increase in July 2022, Stats NZ said.

On an annual basis, food prices rose 2.3% in the 12 months to January compared with a 1.5% rise in December.

“The proportion of the food basket that increased by over 5% in price was the highest in five years,” prices and deflators spokeswoman Nicola Growden said.

Grocery prices increased 3%, with prices for fresh milk and eggs rising 6.6% and 4.8% respectively.

Fruit and vegetables also continued to grow, up 2.8% compared with December. Broccoli and kiwifruit had the largest price shifts due to seasonal changes.

Meat, poultry and fish prices rose 1.8% in January, while non-alcoholic beverages were up 2.3%.

Restaurant meals and ready-to-eat food prices were unchanged for the month.

Alcohol and tobacco prices both grew in January, up 1.6% and 3.9% compared with December.

Petrol prices continued to rise, up a further 4% in January, but diesel reported a larger price increase of 5.8% for the month.

Domestic and international air travel were the only categories to report a price decrease as the holiday period ended, falling 1.3% and 11.7% respectively.

The price of domestic accommodation services rose 2.8% in January while international accommodation services increased 1.6%.

Following Stats NZ’s review of the Selected Price Index for 2024, several changes were made.

Meal kits have been included in the measure, and spinach replaced celery as a measurable item.

Stats NZ also said the relative importance of the non-alcoholic beverages subgroup had increased, while the relative importance of the fruit and vegetables subgroup had decreased.

Rental data has been delayed due to changes within the Ministry of Business, Innovation and Employment, which recently completed upgrades to its tenancy bond lodgement system.

Inflation pressure

Westpac senior economist Satish Ranchhod said the result was firmer than expected but it was “a Valentine’s Day massacre” for chocolate prices.

“Grocery food prices were boosted by a 9% increase in confectionary prices, including a massive 13% increase in chocolate prices!” Ranchhod said.

“We typically see chocolate prices spiking ahead of Valentine’s Day. But this is the biggest increase we’ve seen over the past 25 years, and likely reflects the rise in global cocoa prices.”

Ranchhod also said that accommodation spending was firmer than expected.

As for the wider economic picture, Ranchhod said today’s update suggested some upside risk to Westpac’s forecast for 0.6% growth in consumer prices in the first quarter of 2025.

“We still think the RBNZ will deliver a 50 basis point cut on 19 February.”

“However, the underlying detail of inflation is changing. Domestic pressures are still easing. But the weakness in imported costs that has pulled inflation down over the past year looks like it is ending.”

Tom Raynel is a multimedia business journalist for the Herald covering small business and retail.