New Zealand Food Prices Jumped 1 % in May 2008

A leap of 1 per cent in the food prices for the month of May 2008 drove the Food Price Index (FPI) up 6.8 per cent in the year 2008 to May 2008, reports Statistics New Zealand.

According to the reports released by the Statistics New Zealand on food prices in the month of May 2008, showing the prices of food edged higher 1.0% on month from 0.3% increase in April 2008.

For the year 2008 to May 2008, food prices rose 6.8%, with the most significant upward contribution came from higher prices for the grocery food subgroup, which was up 11.8% recorded in May, reports RTT News.

This increase in the food prices was mainly driven by higher prices for fruit and vegetables, non-alcoholic beverages and grocery food. Talking about fruit and vegetables subgroup, the main contributor for the food price rise was driven in particular by tomatoes, lettuce and broccoli.

Price and demand of soft drink became the main contributor for price rise in the non-alcoholic beverages subgroup and the grocery food subgroup price rose due to higher prices for a wide range of goods within this subgroup.

Rising oil prices is said to be another contributor for the food price rise not only for the country but through out the world. Also an increased demand and shift in eating habit from developing countries especially from China and India has created a gap in supply and demand for the food materials.

"Obviously if petrol prices and food prices do continue to rise from here, then we do risk inflation being a little bit higher than what the Reserve Bank expects," says Nick Tuffley, ASB Economist, reports One News.

According to the research analyst at Arth Business Research, “Skyrocketing oil prices and increasing prices of fruit and vegetables, non alcoholic beverages and food grocery along with increasing demand from developing countries is expected to increase the food prices further for the country.”

Slower Domestic Demand Pushes Australian Retail Sales to Drop 0.2% in April 2008

A sharp drop in retail sales figures for April 2008 masks what economists consider is a flat result for the month.

Australian retail sales fell in April 2008, adding to evidence of slowing the nation's 17 years of economic expansion.

Sales fell 0.2 percent from March, when they climbed a revised 0.2 percent, the Bureau of Statistics said in Sydney today. The median estimate of 22 economists surveyed by Bloomberg News was for a 0.2 percent gain, reports Bloomberg.

Skyrocketing gasoline prices and a rise in borrowing cost by the central bank is the main reason behind the fall in the retail sales. Slowing economy along with higher borrowing cost tide the customer hands for further spending. Hence less domestic demand is creating the pressure on the retail sales industry and forcing its sales to drop down.

Also inflated food prices made the damage to the retail sales with decreasing spending on retail food products. The Australian turnover of retail sales decreased due to decline in sales by chain and large retailers. The sales decline for small retailers is expected to be marginal. At the same time decline in spending on the recreational goods made the retails sales to decline further.

"If we exclude the Easter effect, we can see that ex-food retail sales over the last two months have been flat," ANZ economist Katie Dean wrote in a note to clients. "This confirms the economy is slowing and should put the RBA out of the game. The big uncertainty is whether this slowdown will continue when the July tax cuts arrive," she adds, reports The Age.

According to research analyst at Arth Business Research, “ This decline in retail sales is expected to improve in coming months as the Australian government is expect to cut the income taxes which would increase the income of the wage earners marginally. Also some expected relief from RBA would help the retail sales to regain the ground.”