The price of a block of butter is now 120% higher than it was 10 years ago, and increases in dairy prices in general helped pull up food prices in June, according to Stats NZ.
Food prices lifted 4.6% in the 12 months to June 2025, official figures show.
Stats NZ spokesperson Nicola Growden said dairy prices were a continued driver of the increase.
Milk was up 14.3% for the year to $4.57 for two litres, butter was up 46.5% to $8.60 for a 500g block, and cheese was up 30% to $13.04 for a 1kg block.
"Butter prices are nearly five dollars more expensive than ten years ago, an increase of over 120 percent," Growden said.
There were also significant rises in the price of meat, poultry and fish.
"The average cost for 1kg of beef mince was $21.73 in June 2025, up from $18.80 a year ago."
Food prices rose 1.2% in the month.
More expensive tomatoes, capsicum, and broccoli drove the increase for fruit and vegetables, while higher prices for boxed chocolates and eggs drove the increase for grocery foods.
Price rises forecast to level off
Gareth Kiernan, chief forecaster at Infometrics, said there were signs that the increases in dairy could soon level off.
There have been recent falls at dairy trade auctions and forecasts of increased supply out of Europe.
"You may see those prices stabilise rather than trending upwards."
Beef prices in general were quite strong and lamb prices had been pushing up after being low in late 2023 and early last year, he said.
"There is some strong upward momentum there, which I think is a reflection of just less international supply across both of those."
Kiwibank economist Sabrina Delgado agreed the near-term picture was for prices to stabilise rather than fall.
"While recent global dairy trade auctions have shown some downward movements, prices remain at historically elevated levels. And farmgate forecasts are still firm between $8 and $11 per kgMS [kilogram of milk solids] for the new season.
"However, with downside risks dominating the global environment and the projected global slowdown unfolding, we do expect commodity prices to come under pressure. In the medium term, we expect weak global demand to exert downward pressure on all commodity prices, including dairy prices."
Inflation
Kiernan said he did not think the Reserve Bank would be too concerned about the prospect of pressure on prices adding to wider inflation.
"They can't do anything about international commodity prices, right? I don't think they're going to lose sleep over what dairy and meat prices are doing from an inflation perspective.
"They'll probably be happy in the sense that the positive effects of these price rises on export incomes will help the economic recovery we've been holding out for over the next 12 to 18 months… maybe if anything it adds weight to the fact they don't need to cut interest rates too much more from here but it's probably more of a growth story than an inflation one in general."
Westpac's economists said they expected annual inflation to come in slightly higher than the central bank's forecast but it had made comments recently that indicated it might already be braced for that.
At ANZ, senior economist Miles Workman said it would take a "sizeable" surprise in the next inflation data to stop the Reserve Bank from cutting the official ash rate next month.
He said with food price inflation elevated and electricity inflation at its highest level in 20 years, many households would feel a cost-of-living squeeze even when inflation was within the Reserve Bank's target band.
