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Fonterra says a big slump in the price of dairy products on international markets is finally starting to bring down the price of cheese and butter for local shoppers.
In the past few months some buyers have questioned why the retail prices for dairy products - which rose dramatically during the international dairy boom - have not fallen as world prices have dropped.
The ANZ Commodity Index released yesterday shows the international price of dairy products has dropped about 50 per cent since its peak in the middle of last year.
A Fonterra spokesman said yesterday that the company did not set retail prices. But he noted that the prices of some products had started to fall.
"For example a 1kg block of cheese is now about $2 cheaper than it was 12 months ago. A 500g pack of butter is down about $1 from 12 months ago.
"This softening in prices has largely occurred in the last two months."
Prices would fall further, he said, but there was a delay because Fonterra had not passed on the full cost increase to consumers when dairy prices were at record highs last year.
In May the Herald reported 1kg of Mainland Tasty cheese selling for $16.15.
"It would be wrong to expect a massive correction in the market, as we never passed on the peak prices," the spokesman said.
"Fonterra Brands NZ also has cheese and butter inventory that was bought six to nine months ago when its commodity price was more than double historical averages, so it will take some time for this product to flow through the market."
Soaring demand from emerging markets last year pushed prices for all major food groups, as well as oil and metal, to unprecedented levels.
The global financial crisis has dramatically reversed that situation by slowing economic growth and curbing consumer demand.
