New Zealand food prices eased on the month in December as fresh produce came into season but were still higher on the year as dairy, fruit and vegetable prices continued to pressure people's wallets.

Annual food prices rose 2.3 percent, with fruit and vegetable prices lifting 4.5 percent. Higher vegetable prices, up 4.3 percent, were influenced by increases in pumpkin, kumara, and potato prices.

Pumpkin prices continued to increase, up 231 percent versus the same month a year earlier, to its highest ever level. Fruit prices rose 4.8 percent, with avocado prices up 88 percent versus the same month a year earlier. The average price for a 200g avocado was $2.31 in December 2017, compared with $1.23 in December 2016.

Meat, poultry, and fish prices increased 0.9 percent in the year to December 2017, with a 17 percent lift in lamb prices partly offset by cheaper beef and veal, which were down 1.8 percent.

Grocery food prices increased 2 percent, with higher prices for fresh milk, butter, ice cream, and snack foods. Restaurant meals and ready-to-eat food prices increased 2.5 percent versus December 2016 while non-alcoholic beverage prices lifted 2.1 percent.

The food price index fell 0.2 percent on a seasonally adjusted basis versus the prior month, Statistics New Zealand said. Fruit and vegetables cost 1.6 percent less than they did in November, with fruit prices down 1.9 percent and vegetables down 1.3 percent. Grocery foods fell 0.8 percent, with the largest fall in confectionary, nuts and snacks.

In actual terms, food prices fell 0.8 percent from November.

Stats NZ said butter, chocolate bars and wholemeal bread prices fell in December. After four successive monthly rises, butter prices dropped 4.9 percent in December 2017 to an average of $5.46 for the cheapest available 500g block.

Latest release: Butter prices drop almost 5 percent in December. https://t.co/TwMRe3QFUP

— Stats NZ (@Stats_NZ) January 14, 2018

This compared with the previous month when they hit a record high of $5.74. Butter prices had been falling at international dairy auctions since October.

"Specials on grocery items drove food prices down this month, but the higher prices for dairy, fruit, and vegetables throughout the year meant consumers were still facing 2.3 percent higher food prices than last December," prices manager Matthew Haigh said.

Food prices account for about 19 percent of the consumers price index, which is the Reserve Bank's mandated inflation target when setting interest rates. The higher annual food prices and a recovery in oil prices has led to some signs of inflationary pressure, although housing-related costs are still the dominant contributor to higher consumer prices. However, while the central bank lifted its forecast inflation at its November monetary policy review it still does not expect to begin lifting rates until June 2019 at the earliest.

- Business Desk