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Butter prices up as people realise it's not unhealthy

Newshub logoNewshub 13/09/2017

The rise of the price of butter is not over according to an ASB economist.

Statistics NZ yesterday said a 500g block of butter now cost an average $5.39 - a record high. In some supermarkets, prices are approaching $7.

ASB senior rural economist Nathan Penney told The AM Show on Friday international prices are at record highs due to a worldwide shortage of butter, which is driving up prices here.

The shortage is due to excess demand, as butter is no longer considered unhealthy.

"The science saying saturated fats are bad for you, that's been debunked and that's led to this boom."

Labour's water tax may also affect the price but not much, Mr Penney stressing that in this case "it's all about demand".

The rising price of butter has clear winners, with farmers and producers able to expect better payouts for their milk, but supermarkets and consumers will be carrying the cost of increased demand.

Mr Penney believes we haven't hit the peak yet. Discussing prices New Zealand could expect in the near future, he said that he "wouldn't say $7 but we might get close to $6, on that sort of lower-end price".

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