Food prices up 5% as milk, cheese and butter drive August year 2025 rise

Food prices lifted by 5% in the August year, with groceries and meat key contributors. Photo / NZME

Higher prices for the grocery food group have been the key contributor to a 5% increase in food prices in the 12 months to August 2025, according to Stats NZ.

Prices in the grocery food group rose by 4.7% annually (up 0.2% monthly), with the usual suspects of milk, cheese and butter the largest influence.

The average price for 2 litres of milk is up 16.3% annually ($4.72), a 1kg block of cheese is up 26.2% annually ($12.89) and a 500g block of butter is up 31.8% annually ($8.58).

“Dairy products continue to be the main driver for the higher annual food prices,” prices and deflators spokesperson Nicola Growden said.

“The price of 2 litres of milk has increased by 88 cents since December 2023.”

Prices for the meat, poultry and fish group were the next largest contributor to the annual increase, up 8.1% annually (up 1.4% monthly).

This was particularly driven by higher prices for beef steak, beef mince, and lamb leg.

“The average price for beef mince was $22.53 per kilo in August 2025, that’s an increase of $3.40 in just one year.”

Red meat prices are higher because of increased export demand, particularly to Europe and the US.

As for the remaining food groups, prices for fruit and vegetables were up by 8.9% annually (0.6% monthly).

The fruit and vegetable group contained the item with the highest percentage increase from the same month of the previous year, with cabbage up 85.5% compared to August 2024.

It also had the biggest percentage decrease, with kiwifruit down 9.3% compared to August 2024.

Restaurant meals and ready-to-eat food were the next largest contributors, up 2.4% annually (0.4% monthly), with non-alcoholic beverages the remaining category, also up annually by 3.9% (down 1.2% monthly).

In the non-food categories, rent prices increased 2.1% in the 12 months to August 2025, following a 2.4% increase in the 12 months to July 2025.

“The last time annual rent price increases were under 2.1% was March 2011.”

Cigarettes and tobacco prices remained up 4.8% annually, while alcoholic beverages are up 0.6% compared to this time last year.

In transport, petrol prices are down 2.4% compared to this time last year, with diesel prices down 4% annually.

Domestic air transport costs are down 8.6% on an annual basis, however international air transport costs are up 8.3% annually.

Meanwhile electricity prices are up 11.4% annually, compared with Stats NZ’s September 2024 quarterly collection, while gas is up 14.5% annually.

Economist reaction

ANZ chief economist Sharon Zollner said the results for August came in slightly weaker than their expectations, unwinding the small amount of upside risk to its forecast signalled by the result in July.

“Today’s data suggests risks are broadly balanced around our Q3 CPI [Consumers Price Index] forecast of 1.0% quarter-on-quarter,” Zollner said.

“In other words, given today’s SPI [Selected Price Indexes] data suggests inflation pressures are tracking broadly as the RBNZ expect, it shouldn’t present any roadblocks to the market taking full signal from Thursday’s Q2 GDP release.”

Tom Raynel is a multimedia business journalist for the Herald, covering small business, retail and tourism.