Butter price spike: 500g block hits $9.19 amid tighter global supply

Supermarkets have cited global conditions and Christmas cream demand for some high butter prices. Photo / Bay of Plenty Times

The price of butter has topped $9 for a 500g block in some shops and one analyst is warning prices could stay high for months due to global butter supply shortages.

This time last year The Warehouse was selling a 500g block of butter for $4.30 but yesterday it was $6.90 – a rise of $2.60 or 60.47%.*

At the time of writing, Woolworths was selling six different blocks of butter in its stores, with prices ranging from $6.49 for a 500g name-brand block to $9.19 for a 500g Anchor block.

Pak’nSave’s own brand Pam’s 500g block was retailing for $6.29, making it the cheapest on offer for a 500g block at a major retailer. It also had the same 500g Anchor block as Woolworths and New World, except at $8.69, 50 cents cheaper.

New World’s Victoria Park store was selling own brand Pam’s 500g block at $6.49.

New World was selling nine different blocks of butter, with prices ranging from $3.79 for a 100g block of Dairyworks garlic and sea salt butter to the same $9.19 Anchor block.

Pak’nSave was selling 10 blocks ranging from $4.59 for 200g of Petit Normand salted butter to $9.29 for 250g of Biofarm Organic Times’ lightly salted.

A spokesperson for New World and Pak’nSave operator Foodstuffs said any change in supplier pricing had a direct impact on the price for customers.

“The price of butter on our shelves is primarily influenced by the broader dairy market and the wholesale costs set by our suppliers,” the spokesperson said.

“Over the past 18 months, global butter commodity costs have risen by around 43%.

“As butter is already a low-margin product for us, we work hard to keep prices as affordable as possible despite these cost pressures.”

The Warehouse’s general manager for grocery, Ryan Murphy, said the cost of food was a huge challenge for Kiwi families.

“Our $6.90 Market Kitchen butter is one of our most popular grocery items and one of the most affordable butters in the market,” Murphy said.

“By stocking our own home-brand butter, we can manage costs better and pass on more savings to our customers.”

As for why butter’s price had risen so steeply, Murphy pointed to Fonterra and the Global Dairy Trade (GDT) which control the price of the commodity.

He also cited declining milk production.

Stats NZ’s latest consumer price index for November, covering prices of basic food items, showed the price of butter had been steady since September, hovering around the $6.60-$6.70 per 500g price point.

But the average price was up 48.6% compared with December 2023 when a 500g block of butter was only $4.48.

The Warehouse Group may have the smallest range of butter available, but it also has the cheapest prices.

Prices may be set to rise

ANZ agricultural economist Susan Kilsby said butter prices had lifted by 24% over the past year in the global markets.

“Demand for cream [which is used to make butter] does tend to peak over the Christmas holiday period which tightens supply available for butter,” Kilsby said.

“Butter has been in short supply in some parts of the world, as dairy production is relatively stagnant in many markets, whilst demand continues to lift.”

Unfortunately for Kiwi consumers, Kilsby expected butter prices to stay relatively high for the next three to six months.

But there may be some movement at the retail level where prices eased off as seasonal demand fell after Christmas and New Year, Kilsby added.

At the Global Dairy Trade’s latest auction on January 7, the global price of butter increased by 2.6%, to an average price of US$6815 ($12,098) a tonne.

It also predicted the price of butter would keep rising in subsequent contracts, peaking with a large increase of 4.1% in the March contract.

Consumer NZ’s acting head of research and advocacy, Jessica Walker, said Kiwis deserved transparency and accountability around supermarket pricing.

“In August last year, a Consumer NZ investigation into butter prices found that based on where you are in the country you could be paying 86% more for your butter than the cheapest price on offer.

“We found Anchor 500g butter was priced as high as $11.49,” Walker said.

“While ‘shopping around’ for the best deal isn’t realistic or possible for everyone, it’s worth knowing prices can and do vary highly across supermarkets.”

The average price for dairy products at the first GDT auction of 2025 on January 7 fell 1.4% to US$4029 ($7145) a tonne.

Tom Raynel is a multimedia business journalist for the Herald, covering small business and retail.

*an earlier version of the story incorrectly said The Warehouse had the cheapest 500g block.