The price of butter hit a record $5.67 a block in October, and played a big part in driving the Food Price Index higher over the year, Statistics NZ (SNZ) said.

SNZ said rising dairy prices have pushed food prices up 2.7 percent in the year to October, following a 3.0 percent increase in the year to September .

"Butter prices led the way again - up 62 per cent from the same time last year," SNZ said.
Milk and cheese prices also increased (up 7.5 and 12 percent respectively) and had large contributions to the increase in food prices seen in the year to October.

"Dairy products are very widely used inputs in a number of food items," consumers price index manager Matthew Haigh said in a statement.

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"The effects of price rises flow on to products such as takeaway biscuits, buns, cakes and coffee, and eating out for lunch and dinner, all of which saw increases in the year to
October 2017."

SNZ said the average price of the cheapest available 500g block of butter was $5.67 in October 2017, compared with $5.55 in September 2017 and $3.50 in October 2016.

Butter prices hit a record US$6026 a tonne on the GlobalDairyTrade auction platform in September - its highest point since the platform was established 2008. World prices have since come down, hitting US$5516 a tonne earlier this month.

Monthly food prices fell 1.1 per cent in October, with tomato, lettuce, cucumber, and capsicum prices showing large seasonal falls, SNZ said.

Tomato prices were down to $7.68 a kg, compared with $10.02 in September, however, prices remained considerably higher than the $6.83 per kilo in October 2016.

Fruit and vegetable prices fell 6.8 percent in October, making it the largest contributor to the monthly decrease.

After seasonal adjustment, however, fruit and vegetable prices fell 1.3 per cent.

"Although fruit and vegetable prices have dropped this month, the impact of bad weather earlier in the year continues to cause higher prices compared with this time last year," Haigh said.

Kumara, pumpkin, and avocados have seen the largest increases since October last year.