The price of butter increased by 60% in February 2025 compared to the same period last year, Stats NZ data has revealed.
It averaged $7.32 per 500g block, an increase from nearly $4.50 at the beginning of 2024 and approximately $5.20 four years prior.
Infometrics chief forecaster Gareth Kiernan highlighted that supply from major dairy-producing regions like Australia, Europe, the U.S., and South America was limited in 2024 due to weather events and high energy costs in Europe.
“At the same time, demand continued tending upwards, and so international dairy prices have been recovering since about August 2023,” he said.
The supply is anticipated to improve overall this year, which should help cap future price increases.
However, Kiernan warned of potential economic risks that could impact demand. Uncertainty surrounding tariffs and international trade policies, particularly involving the U.S. under Trump’s administration, could dampen global dairy markets.
Additionally, weaker Chinese demand for dairy products may lead to some softness in international prices later in 2025.
He also cautioned that New Zealand consumers might not see notable price relief soon. Current dairy prices align with a payout of over $11 per kilogram of milk solids—a figure higher than Fonterra’s forecasted $10 payout.
“In other words, even if there is some softness in international prices later this year, we would need to see a reversal of more than 10% before NZ consumers might see any price relief at the supermarket,” he said.
“The other factor to bear in mind is the exchange rate – if NZ’s export outlook was to deteriorate due to the trade war, for example, it would probably place some downward pressure on the NZ dollar, thereby reducing the extent of any dairy price fall in NZ dollar terms.”
At supermarkets, the lowest-priced butter currently costs $7.19 at Woolworths, $7.79 at New World, and $6.89 at Pak ‘n Save.