13 Sep 2017

Butter boom: Grocery prices churn higher

3:48 pm on 13 September 2017

The cost of baking just got more expensive with butter prices hitting a record high.

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Photo: 123rf

Official figures show food prices rose 0.6 percent in August, following a slight fall in July.

Fruit and vegetables rose 3.3 percent last month, while meat, chicken and fish fell slightly.

Grocery prices rose 0.3 percent, led by rises in butter and chocolate.

The average cost of a 500g block of butter was $5.39 - beating a previous record $5.05 set in June.

Statistics NZ consumers price index manager Matthew Haigh said the bump in butter prices reflected a global trend.

"We have seen butter prices rising lately due to New Zealand's export-driven market ... butter prices have experienced all-time highs in the global market, and this also drives the price here at home," he said.

An ASB rural economist, Nathan Penny, said the popularity of butter is surging after scientists debunked research linking animal fats with heart disease.

"It is back with a vengeance. For example McDonald's, they started to put butter back onto their muffins. So as those sort of places started to embrace butter again, it really did gain momentum. It started in the US, but now it's global."

Mr Penny said he expected butter prices to keep rising as farmers have not had time to respond to the rapid growth in demand.

On an annual basis, food prices rose 2.3 percent in the year to August.

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