Food index up as milk, butter at record high prices

Photo / Hawke's Bay Today

Food prices have risen 4.8 per cent over the past year, with milk and butter hitting the highest prices recorded.

Fruit and vegetables have risen the most, and horticulture experts predict further increases as the spell of dry weather makes it harder to plant and grow crops.

The Food Price Index, released yesterday by Statistics New Zealand, blames the weather and October's increase in GST for some of the rises.

Although fruit and vegetable prices usually drop after winter, when longer daylight hours increase crop growth and supply, prices are still above the levels usually recorded at this time of year, Statistics NZ says.

The biggest price rises were seen in butter (61 per cent), tomatoes (41.9 per cent) and potatoes (31.9 per cent).

Tomato and potato crops have fallen victim to psyllid, a pest which injects toxins into crop leaves, spreading a disease called liberibacter - the resulting shortage has accounted for some of the rise.

Other price increases include fresh milk (14.7 per cent) and cheddar cheese (24.4 per cent).

A Fonterra spokeswoman said rising prices for commodities such as oil, grain, sugar, butter, cheese and milk powder - all of which trade on the international market - combined with October's GST increase, had contributed to the index rises.

Horticulture New Zealand spokeswoman Leigh Catley said it had been an unusual year for growers.

"There's been quite a lot of cold weather in some places and quite a wet winter in others. It's been a tricky year in terms of growing things and on the top of that, they still have ongoing issues with liberibacter and psyllid."

However, she said it was not all bad for consumers.

This year's cherry crop was expected to be very good and there were plenty of strawberries around, which led to cheaper prices.

Food prices fell 0.6 per cent in November, following increases of 2.2 per cent in October and 0.7 per cent in September due to the October GST rise.

Lettuce prices dropped by 34.4 per cent, tomatoes by 26.6 per cent and broccoli by 45.2 per cent - decreases usually seen in November.

However, food prices are best compared over a year because of seasonal volatility and weather events.

This year's lettuce prices are still two-thirds above the November average for the past 10 years; broccoli prices are one-third higher than average.

Labour's Finance spokesman David Cunliffe said the index showed the difference that Labour's policy for exempting fresh fruit and vegetables from GST would make.

"John Key's tax switch has helped his wealthy mates, but struggling families, who missed out on the tax cuts but are paying the increase in GST, are finding it a crippling burden buying healthy, fresh food," he said.

"Labour's policy of scrapping all GST on fresh fruit and vegetables will make a real difference to the lives of tens of thousands of Kiwi families."

UP

* Butter: +61 per cent
* Tomatoes: +41.9 per cent
* Potatoes: +31.9 per cent
* Cheddar cheese: +24.4 per cent
* Vegetables: +17.6 per cent
* Fresh milk: +14.7 per cent

DOWN

* Fresh chicken: -4.3 per cent
* Bacon: -3.5 per cent

- Year to November 2010