What's going on with the price of butter?

A block of butter. File photo

If you have bought butter recently you might have noticed something - it is a lot more expensive.

Stats NZ said last week that the price of butter was up 60 per cent in February compared to the same time last year.

It recorded an average of $7.32 per 500g block, up from just under $4.50 at the start of last year and just under $5.20 four years ago.

At supermarkets this week, Woolworths' cheapest butter was $7.19, in New World's North Island stores it was also $7.19, while in its South Island stores it was $7.79 and Pak n Save's was $6.89.

Infometrics chief forecaster Gareth Kiernan said butter prices were being affected by supply and demand dynamics.

"Supply from Australia, Europe, the US, and South America was somewhat constrained during 2024 for a variety of reasons - weather events in some places, high energy costs in Europe. At the same time, demand continued tending upwards, and so international dairy prices have been recovering since about August 2023."

He said supply was expected to generally improve this year, which should put a limit on future price rises.

"At the same time, the downside risks to the global economic outlook and demand are increasing given the uncertainty around tariffs and international trade due to Trump. Putting aside the trade war, Chinese demand for dairy products also looks to be relatively weak, so there could be some softness developing in international dairy prices later this year," he said.

But he said there were reasons to believe there was not likely to be much relief in sight for shoppers, either.

"Current dairy prices are consistent with a payout of over $11 per kilogram of milk solids, compared to the $10 currently being allowed for by Fonterra.

"In other words, even if there is some softness in international prices later this year, we would need to see a reversal of more than 10 per cent before NZ consumers might see any price relief at the supermarket. The other factor to bear in mind is the exchange rate - if NZ's export outlook was to deteriorate due to the trade war, for example, it would probably place some downward pressure on the NZ dollar, thereby reducing the extent of any dairy price fall in NZ dollar terms."

His colleague, principal economist Brad Olsen, said butter was a factor in Foodstuffs' supplier costs lifting 3.6 per cent per year in February, compared to 3.3 per cent in January.

Miles Workman, a senior economist at ANZ, said butter prices had lifted steadily since December.

"While rising prices is good news for our exporters, it does mean NZ consumers are paying more."

Foodstuffs said pricing was driven by market and wholesale costs.

"As global commodity costs for butter in the global dairy trade rise or fall, this impacts the price of what we see on our store shelves. In the current climate, we understand that getting value at the checkout is more important than ever and that's why we're doing everything we can to support our shoppers by buying well, finding efficiencies in our business, and continually working with our suppliers to get the best deals possible so that we can pass any savings on to our customers. "

Woolworths said suppliers and manufacturers would be best placed to comment.

-RNZ

3 comments

Supply and….

Posted on 19-03-2025 11:45 | By Shadow1

..demand dynamics! What a load of rubbish. Butter is made in NZ, we are New Zealanders. Why should the cost of our produce be affected by overseas demand and overseas prices. I’m pretty sure that the cost of producing a 500g of butter and getting it to the supermarket is well known. So add a reasonable profit and GST to it and it would still be affordable. Obviously the Governmental watchdog misses a few things.
Has anyone bought meat at the supermarket lately? Bloody Nora!
Bring in more Australian produce if it’s cheaper than NZ produce, I for one have had a guts full of the ever increasing prices.
Shadow1.


Dairy and Eggs

Posted on 19-03-2025 14:11 | By Dee236

Im always weary at what butter and eggs are going to cost these days. When at the grocery store buying these products sometimes mean I miss out on something else that week because for x2 500g butter and x1 18s mix size eggs come out to $28 shopping at pak n save. It's annoying how expensive they have become whilst the bird who lays them is the cheapest meat lol


Totally agree

Posted on 19-03-2025 16:32 | By glass1/2 full

yep - I'm with you there Sahdow 1 .... and DON'T BUY BIG BRANDS - they are the biggest rip off


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