Food prices edged slightly lower during April, with grocery items largely unchanged over the past year, reflecting a benign inflationary environment.
For the year to April, food prices overall were unchanged.
The slight 0.1% price decline during April was led by a sharp drop in non-alcoholic beverages and grocery prices, respectively 2.6% and 0.7%, which offset increases in meat, fruit and vegetables, respectively up 0.7% and 2.8%, according to Statistics New Zealand's food price index released late last week.
ASB economist Jane Turner said beyond monthly volatility, the trend in food price inflation remained "very subdued and adds to a soft overall inflation environment", with annual CPI inflation picked to remain at the lower end of the Reserve Bank's target of 1%-3%, she said.
"Recent declines in dairy and beef commodity prices suggest food price inflation is likely to remain muted over the coming year," she said in a statement.
The prices of non-alcoholic beverages fell due to discounting on soft drinks, packaged coffee and tea, while other grocery price declines were led by items including potato crisps, crackers, yoghurt and sweets.
There were also declines in dairy products including cheese, butter and milk.
Recent declines in dairy commodity prices suggested dairy prices could possibly ease further during the year, but Ms Turner cautioned the link between global commodity prices and domestic retail prices was often "fairly muted and lagged".
