Food prices account for nearly a fifth of the CPI basket, meaning even modest declines can have a meaningful impact on headline inflation outcomes.
For the RBNZ, food inflation has been a persistent challenge over the past two years, driven by global supply shocks, higher input costs, weather disruptions and elevated margins across parts of the food supply chain. While annual food inflation remains elevated at 4.4%, the second consecutive monthly decline suggests price pressures may be losing momentum at the margin.
This easing is particularly important given the Bank’s focus on bringing inflation sustainably back within its 1–3% target range without inflicting unnecessary damage on household demand. Food prices are highly visible and politically sensitive, and sustained moderation would help alleviate cost-of-living pressures for households already strained by high mortgage rates.
From a policy perspective, softer food prices support the case that restrictive monetary settings are working their way through the economy
