This note assesses whether progress has been made towards rebalancing the underlying structure of New Zealand’s macroeconomy. We explore five influences driving New Zealand’s macroeconomic imbalances – tradable sector activity, the burden of inflation control, net external trade receipts, expenditure in the domestic sector, and the direction of finance.
The latest food price data release confirms the ongoing decline in food prices. November data shows food prices have been below year-earlier levels for six out of the last seven months, with October being the only exception.
From October 2011 to October this year, food prices have risen 0.3 percent. This is the first rise in food prices since April this year. The main driver behind this rise was increased fruit and vegetable prices.
Food prices eased in September, down by 0.9 percent on the previous month and 0.3 percent on the same month last year. This is consistent with international prices, which are down 4.1 percent on the year. Prices are expected to recover along with the global economy, but also because of unfavourable growing conditions in India, Europe and the US.
Food prices increased marginally in August – by 0.1% according to Statistics New Zealand’s latest release of its food price index. The most significant increase came from fruit and vegetable prices, which were 1.5% up in August. Prices for fruit and vegetables tend to rise in winter months and have been rising month on month since April.
Since June this year, food prices have increased by 0.2 percent according to Statistics New Zealand’s latest release of its food price index.
GDP grew 1.1% in the three months to March 2012, taking annual growth to 2.4%. The figure was a positive surprise, incorporating conservative growth in primary and manufacturing industries and nearly flat domestic spending. Looking at the detail however, the quarterly figure was helped by a large increase in the statistical discrepancy. Without this contribution growthbin the March quarter would have been a more modest 0.6%.
The month of June saw food prices increase by 0.2 percent according to Statistics New Zealand’s latest food price index.
In releasing its latest quarterly assessment of prospects for the New Zealand economy, independent forecasters BERL paint a dismal picture for the immediate future.
According to Statistics New Zealand’s latest food price index, overall food prices in March were down 1 percent compared to February. In addition, prices were down for all five broad categories: fruit and vegetables, meat, poultry and fish, grocery food, restaurant and ready-to-eats, and non-alcoholic beverages.
The farm-gate value of dairy, sheep and beef products grew by 58% from $10.2 billion in the 2006/2007 season, to $16.3 billion in the 2010/2011 season – but greater investment in pasture renewal could have boosted growth even further.
The Capital Goods Price Index rose 0.4 percent in the December 2011 quarter, taking the annual increase to 1.1 percent. This slight upward trend follows a very subdued period where the index remains at the same level as the June 2009 quarter.
Overall, food prices in January 2012 didn’t change from December 2011. For the year however, food prices were up by one percent.