New Zealand food prices rose from a four-month low in May, as more expensive meat and vegetables offset a decline in fruit prices.

The food price index rose 0.4 percent in May, following a 0.3 percent decline in April, according to Statistics New Zealand. On an annual basis food prices were 0.8 percent higher in May than in the same month a year earlier, and rose at a slower annual pace than April's 1 percent gain.

The index makes up nearly one fifth of the broader consumers price index, which has dropped below the Reserve Bank's 1 percent to 3 percent target range, rising at an annual pace of 0.1 percent in the year to March 31. Yesterday, central bank governor Graeme Wheeler surprised parts of the market when he cut the official cash rate 25 basis points to 3.25 percent, citing low inflationary pressures and the sharp drop in dairy prices which had dented New Zealand's terms of trade.

Today's data showed all measures of the food price index rose on a monthly basis, with meat, poultry and fish prices rising 1 percent, as more expensive fish and seafood offset a decline in beef prices. Fruit and vegetable prices increased 0.3 percent as cheaper bananas and kiwifruit were offset by a gain in tomato prices.

Grocery food prices, which makes up more than a third of the index, rose 0.1 percent, as higher prices for cheese and butter were offset by lower prices for fresh milk. Non-alcoholic beverages rose 0.9 percent and restaurant meals and ready-to-eat food prices increased 0.3 percent.

The annual gain was led by a 4.6 percent jump in the price of meat, poultry and chicken, while restaurant meals and ready-to-eat food rose 1.8 percent and non-alcoholic beverages increased 2.4 percent. Grocery food prices fell 1.3 percent over the year to May, with cheaper bread, fresh milk, cheese and butter. Vegetables and fruit prices declined 1.1 percent, as kiwis paid less for tomatoes and lettuce than they did a year ago, while fruit was more expensive, Statistics NZ said.

(BusinessDesk)