Food prices fell again in the September 2009 month by 0.7 percent, bringing the annual increase in food prices down to only 3.3 percent. While this still seems like a significant increase compare it to the annual increases in the previous months in the graph below.

As the graph shows, food price increases have been steadily falling since around September 2008, apart from two blips in June and July 2009 (which were caused by inclement weather).

Looking further ahead you could argue two ways – food price increases will continue to decline toward 0.0 percent over the next few months; or food price increases will start levelling off around the 2.0 percent and 3.0 percent levels.

Assisting the continued decline argument is the increasing value of the New Zealand dollar against the US and Australian dollar, meaning the imported components of our food consumption basket is getting cheaper. As well this is putting a damper on many input components into food prices such as fuel.

Assisting the levelling off in price increases argument is that the recession appears to be dissipating in people’s memory banks, and food businesses are hoping to recoup some of the losses they may have borne over the last year or so. Demand for commodities is also likely to start increasing, forcing up the prices of some of our staples, such as dairy products.

Our assessment is that increases in food prices are likely to level off at around the 2.0 percent mark and then fluctuate around that mark month to month for the next year or so.

Looking at the individual sub-groups, fruit and vegetable prices were down 8.4 percent on the month while meat, poultry and fish subgroup prices were up 1.8 percent.

Lettuce prices were down 41 percent, cucumbers were 26 percent cheaper, and capsicum prices were down 24 percent from a month ago. On the other side of the ledger, fresh chicken prices were up 6.9 percent and minced beef prices were up 6.8 percent on a year ago.

On the year, the most significant increase in prices came from the grocery food (up 3.8 percent) and meat, poultry and fish (up 7.1%). Fruit and vegetable prices were down 7.4 percent on the year, although this was driven by vegetables (down 14.4 percent) as fruit prices actually increased by 6.0 percent.

In particular, soft drink prices were up 11.3 percent, bread was 11 percent more expensive, bacon was up 18 percent and sausages a fifth higher. Meanwhile lettuce are 37 percent cheaper than a year ago, cheddar cheese is 27 percent cheaper and tomato prices are down 27 percent.

So for the recipe of the month you can’t really go past a summer salad of lettuce, cucumber and capsicum. Get it fresh and make sure you dry off the leaves completely after you wash them – water is not a salad’s friend!!