(OP)inions NZ food prices fuel inflation

January 20, 2022 

New Zealand food costs rose the most in more than 10 years in 2021, adding to risks that the central bank will need to do more to contain inflation expectations. 

The food price index rose 4.5% in December from a year earlier, Statistics New Zealand said Thursday in Wellington. Thats up from 4% in November and the biggest annual increase since September 2011. 

Food makes up about a fifth of the overall CPI and, because it is so regularly purchased by households, has a big influence on inflation expectations. 

The RBNZ began tightening policy in the fourth quarter and expects to lift the official cash rate to 2.5% by the second half of 2023 from its current level of 0.75%.  

Inflation is projected to peak near 6%, twice the top of the central banks 1-3% target range. Statistics New Zealand publishes the fourth-quarter CPI on Jan. 27 

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