Food prices have surged at their quickest rate in over a year, driven by pricier dairy products, indicating that inflation is gaining momentum.
According to Stats NZ, the food price index climbed 3.7% in the twelve months ending in April, marking the highest increase since January of the previous year.
“Price hikes were seen across the board, with all five food categories experiencing a rise,” spokesperson Nicola Growden noted.
Groceries played a significant role in the overall escalation, with a 5.2% increase over the past year, primarily due to significant price hikes for butter, milk, cheese, and coffee.
The cost of butter surged by 65%, cheese by 24%, and milk by 15%.
“The average price for a 500g block of butter in April 2025 was $7.42, nearly $3 more expensive than the same time last year,” Growden highlighted.
Global dairy prices have been on the rise due to heightened demand and diminished supply, consequently driving up domestic expenses.
Similarly, coffee prices worldwide have been climbing due to diseases and adverse weather conditions in key producing nations. The cost of a 100g pack of instant coffee soared by over 17% in the past year.
Stats NZ indicated that airfares, energy expenses, and rents all saw an uptick last month, counterbalancing the cheaper fuel and accommodation rates.
ASB senior economist Mark Smith observed that while monthly price indicators can be volatile, they suggest the emergence of inflationary pressures in certain sectors.
“Annual CPI inflation is likely to remain towards the upper end of the 1-3% target range for much of 2025. Although this may not deter official cash rate cuts, the RBNZ will proceed cautiously,” Smith remarked.
The Reserve Bank of New Zealand (RBNZ) is widely anticipated to reduce the cash rate by 25 basis points to 3.25% during its upcoming monetary policy statement in two weeks.
