Photo: Sorin Gheorghita for Unsplash
Soaring dairy prices revealed this week, particularly for butter, are a double-edge sword according to one senior economist.
Dairy prices were the main driver for food prices rising at their fastest pace in more than a year in the latest Stats NZ figures.
The food price index shot up 3.7 percent.
But within that figure, butter prices were up 65 percent, while milk was up 15 percent and cheese 24 percent.
Stats NZ said the average cost of for 500 grams of butter was $7.42 in April.
Informetrics principal economist Brad Olsen told Morning Report those prices are a double-edged sword.
"For primary New Zealand those higher prices coming through for dairy and meat is good for those on farm earnings.
"And that's money that then gets re-spent into the local economy and why we see rural New Zealand in a better place than urban centres," he said.
But he said while higher international prices give farmers more money, it has meant higher retail costs for consumers.
"You look at the butter price, 65 percent increase in a year, you don't often see numbers like that," Olsen told Morning Report.
"Even the likes of your cheese and your milk prices... double digit increases are quite significant, so that's clearly hitting households."
Olsen said he personally had friends looking for cheaper options like making butter at home.
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