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Butter hits record high due to global demand

NZ food prices rise in August, butter hits record high due to global demand

By Sophie Boot

Sept. 13 (BusinessDesk) - New Zealand food prices rose in August, with fruit and vegetables, meat, and groceries such as butter more expensive than a year earlier.

The food price index advanced 0.2 percent on a seasonally adjusted basis in the month, and gained 2.3 percent for the year to August, Statistics New Zealand said. Fruit and vegetables cost 5.5 percent more than a year earlier, while meat, poultry and fish prices rose 0.6 percent and grocery food prices increased 2.8 percent.

Butter prices hit a record high of $5.39 per block, up 11 percent in the month and 62 percent from a year earlier. The annual butter price increase is the largest in percentage terms since 2010, Stats NZ said. Chocolate prices also rose 3.4 percent in the month.

“We have seen butter prices rising lately due to New Zealand’s export driven market,” consumers price index manager Matthew Haigh said. “Butter prices have experienced all-time highs in the global market, and this also drives the price here at home.”

Food prices account for about 19 percent of the consumers price index, which is the Reserve Bank's mandated inflation target when setting interest rates. A spike in food prices and a recovery in oil prices earlier this year led to a jump in inflation, which has been subdued in recent years, however as those movements flatten out the pace of CPI increase is expected to slow in early 2018, the Reserve Bank has said.

Vegetable prices increased 8.7 percent on an annual basis, driven by higher prices for kumara, potatoes and cucumbers, and were up 5.4 percent in the month. Fruit prices rose 0.3 percent annually, but dropped 0.5 percent in the month, as avocados and strawberries became cheaper in August.

The price of chicken rose 3.3 percent in the year to August 2017, but dropped 2.4 percent in the month, while beef fell 2.6 percent annually and was down 2.5 percent on a monthly basis and pork dropped 8.6 percent in the year. Restaurant meals and ready-to-eat food prices rose 2.3 percent on an annual basis.

(BusinessDesk)

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