NZ vegie prices down, milk up NEW Zealand food prices have fallen for a third month due to cheaper in-season vegetables, though more expensive milk pushed up prices over the year. The food price index slipped 0.1 per cent in December, adding to the 0.2 per cent and one per cent declines in the previous two months, according to Statistics New Zealand. On an annual basis, food prices were up 1.5 per cent, accelerating from a 1.4 per cent annual increase in November. The monthly decline was led by a 3.7 per cent fall in the price of vegetables, with cheaper lettuces, broccoli and cabbages. They were down 1.3 per cent on the year. Fresh milk prices rose 2.7 per cent in December, and were up 9.4 per cent on the year. More expensive dairy products were the main driver of the annual increase in food prices, with yoghurt up 10 per cent, cheese up 7.7 per cent and other milk products up 10 per cent. Last month, the Reserve Bank gave a stronger signal in its monetary policy statement that interest rates will rise this year, noting that inflationary pressures are "projected to increase." Food prices make up almost 19 per cent of the consumer price index. December's CPI is scheduled for release next week. Grocery food prices were flat in December, though up two per cent in the year. Meat, poultry and fish prices rose a monthly 0.8 per cent and an annual 1.6 per cent. Non-alcoholic drinks prices fell 2.1 per cent in December, for an annual increase of 3 per cent, and restaurant meals and read-to-eat foods prices increased a monthly 0.5 per cent and an annual 1.9 per cent.