Milk price higher in 2002 than today

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The price of milk hit a record high in February but in "real" terms actually cost more in 2002, according to a study by Statistics New Zealand.

The Commerce Commission last month said a number of parties had laid complaints about the retail price of milk and it was undertaking preliminary analysis to determine whether a price control inquiry was warranted.

Consumer NZ chief executive Sue Chetwin said people paid too much for milk and deserved to know how prices were set.

Statistics NZ examined the retail price of milk from the 1890s, when a quart cost just over threepence, to this February when the average price hit $3.68 for two litres (based on the cheapest available brand). The February result was the highest in nominal terms, although in real terms the cost of two litres of standard milk was higher in 1994 and 2002, after allowing for inflation, the article said.

The town milk industry was re-organised in the 1940s with the central setting of producer and consumer prices, and a government subsidy paid to make up the shortfall between the two. The fixing of prices was lifted in 1976 and the price for a 600ml bottle of milk doubled in February of that year to 8c.

Full deregulation in 1993 meant milk could be sold at any price and in January 1994 the average price for a 2- litre container was $2.37 - equivalent to $3.78 today.

Home delivery milk dwindled during the 1990s, the article said, and following a high point for export prices the retail price in January 2002 hit $3.20 - equivalent to $4.18 today.

By June 2007, the nominal price had fallen to $2.60 before rising during the next 15 months in to reach $3.37 in September 2008. Retail prices fell back with world dairy prices, before rising again to the highest nominal level of $3.68 for 2 litres in February.