KEY POINTS:
Shoppers can expect no relief from skyrocketing food prices as long as the global price of food production continues to rise, experts said yesterday.
Food prices provided the most significant contribution to the 0.7 per cent on-quarter rise in the Consumer Price Index, which is key to the Reserve Bank of New Zealand's deliberations on interest rates.
Statistics New Zealand said food prices rose 1.8 per cent in the three months to the end of March, with the main contribution coming from grocery food, which rose 3.6 per cent.
Within the grocery food category the main increases came from cheese, bread and butter - and the numbers confirmed what many New Zealanders have known for some time.
According to the Herald's calculations, the price of butter rose a staggering 82 per cent from March 2007 to March 2008, mild cheddar cheese 65 per cent and milk 25 per cent.
Statistics New Zealand said fruit and vegetables rose a collective 3.1 per cent, mainly driven by a 27 per cent increase in the price of tomatoes.
Horticulture New Zealand chief executive Peter Silcock said the rise in fruit and vegetable prices was a result of the hot, dry summer, which stressed plants and reduced crop yields.
"It's just plain supply and demand. When yields go down, and demand stays strong, prices go up," Mr Silcock said.
Tim Morris, managing director of Coriolis Research, said New Zealand exported about $15.4 billion of food and imported about $2.4 billion.
He said New Zealanders were paying global market prices for the food it imported and those, coupled with rising transport costs, were reflected in higher prices here.
Rob Davison, executive director of economic services for Meat & Wool New Zealand, said the increasing world population and rising affluence in India and China, combined with rising fuel costs and the focus on biofuels, were responsible for the global rise in food prices.
The head of the International Monetary Fund warned at the weekend that millions of people worldwide faced starvation and social unrest due to rising food prices.
Dominique Strauss-Kahn said a surge in biofuels meant increasing amounts of primary food sources such as wheat and maize were being diverted from the food supply.
