Food shock: Prices soar in June as fruit and veges follow butter and cheese spike

Brian from Mount Roskill

New stats show food prices rose 4.6% in the year to June – the largest rate of increase since late 2023.
That was up from a 4.4% increase in the year to May, Stats NZ’s latest Selected Price Indexes show.
Rising prices for fruit and vegetables in June have added to already elevated pricing for dairy products to push costs higher.
Higher prices for the fruit and vegetables group and the grocery foods group drove the increase in food prices for June 2025, Stats NZ said.
They were up 5% and 0.8% respectively for 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,” Stats NZ said.
Meanwhile, dairy and meat prices remain elevated, reflecting strong export prices on global markets.
“Dairy products continue to drive the higher cost in food prices,” said prices and deflators spokeswoman Nicola Growden.
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The average milk price was $4.57 for 2 litres, up 14.3% annually. Butter was $8.60 per 500g, up 46.5% annually, and cheese was $13.04 for a 1kg block, up 30% annually.
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“Butter prices are nearly five dollars more expensive than 10 years ago, an increase of over 120%,” Growden said.
The increase in the meat, poultry, and fish group was driven by higher prices for beef steak and beef mince, up 22.3% and 15.6%, respectively.
“The average cost for 1kg of beef mince was $21.73 in June 2025, up from $18.80 a year ago,” Growden said.
The increase in food prices was higher than expected, said ASB senior economist Mark Smith.
Meanwhile, rental prices continue to moderate.
Rent prices increased 2.6% in the 12 months to June 2025, following a 2.8% rise in the year to May.
The 2.6% increase is the lowest lift for rent prices since October 2011, when they rose 2.5%, Stats NZ said.
On a monthly basis, rents were flat, rising just 0.1%.
ASB’s Smith is forecasting it to land at an annual rate of 2.8% and rising above 3% in the third quarter.
That would be above the Reserve Bank’s target range of 1-3%. Elevated inflation concerns prompted the RBNZ to pause its cycle of interest rate cuts last week.
But Smith noted that there were good reasons to expect inflation to move lower by the end of the year and into 2026.
Reduced demand due to weak economic conditions should be disinflationary forces for the service sector and other non-tradable parts of the economy.
“We expect a further 25bp OCR cut in August but acknowledge that weak activity data and the downward skew to global risks could see a sub 3% OCR emerge by year-end,” he said.
But this outlook was not without risk, Smith said.
There was a possibility that the uptick in inflation proved to be more persistent than transitory, “providing an unwelcome lift to inflation expectations that central banks have worked arduously to re-anchor post-Covid”.
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