KEY POINTS:
Dairy lovers, weep. The price of cheese and butter soared last month.
Butter went up 23 per cent.
Overall, food prices increased 0.6 per cent in October, following an increase of 0.4 per cent in September and a decrease of 0.1 per cent in August, Statistics New Zealand said yesterday.
Cheese and butter were the main culprits behind the rise in the latest food price index, reflecting a strong rise in international dairy prices.
Cheese prices increased overall by 7.3 per cent, butter by 23 per cent, and fresh milk by 3 per cent. In the year to October, food prices went up 3.6 per cent.
Federated Farmers dairy section chairman Frank Brenmuhl said yesterday that world dairy prices had risen by more than 100 per cent in the past 12 months.
"What we have seen is an unprecedented lift in the buying power of people from China and Asia and other parts, who have effectively gone from lower class to middle class."
He said the increase in world demand was pushing prices up.
"And effectively New Zealand has to pay the same price as the world market for this product."
He said farmers in New Zealand weren't "creaming it" as many believed.
"What we are starting to do now is to get the return on our capital that other businesses take for granted. Until now we've effectively accepted a lower return on our businesses because over the long term we tend to make up for some of it with capital gain in the price of land."
Foodstuffs managing director Tony Carter said shoppers would inevitably feel the rise in world dairy prices over the past year.
"There's no way the industry can absorb price increases of that scale, hence what you are seeing in butter and cheese and things of that nature," he said.
"We will obviously make an effort to try and delay the impact of those changes as long as we possible can."
He said fruit and vegetable prices fluctuated, depending on factors such as the weather and season.
"And they move daily depending on the market, whereas products like dairy tend to be much more stable."
While groceries, which include cheese, butter, milk and chocolate, increased by 1.5 per cent in October, fruit and vegetables decreased by 1.5 per cent.
Chocolate's price rose 3.8 per cent, but chocolate biscuits were down 7.5 per cent.
Consumer's Institute deputy chief executive David Naulls said last month's price spike was of concern. But goods such as butter weren't necessities, and cheaper alternatives were available.
"Our best advice is to shop around and look for bargains."
