Food prices rose by 4.6% in the 12 months to June, which is the biggest annual rise since December 2023.
However, rents, up 2.6% in the year, had their smallest annual increase since 2011.
These are figures found in Statistics NZ's latest Selected Prices Indexes (SPI). The SPI is a monthly series that now features nearly 50% of the contributors to the quarterly Consumers Price Index (CPI) the accepted measure of inflation. So, they are a good early guide to what inflation's doing.
The Labour Party was quick to blame the Government for the latest spike in food prices, with Labour finance and economy spokesperson Barbara Edmonds saying that Prime Minister Christopher Luxon "promised to make the cost of living better, instead, he’s making it worse".
"It’s no wonder 47,000 people chose to leave for Australia last year."
The soaring food prices will make sure there's plenty of interest in the June quarter CPI figures, which are being released on Monday, July 21. (Food prices make up about 19% of the CPI).
The annual CPI was 2.5% as of March, which is within the Reserve Bank's targeted 1% to 3% range. The RBNZ in its last Monetary Policy Statement (MPS) in May forecast inflation to hit 2.6% for the June quarter and peak at 2.7% in the September quarter.
However, after its latest review of the Official Cash Rate (currently on 3.25%) last week, the RBNZ conceded that inflation was likely to approach the top of its 1% to 3% range in the June and September quarters.
It said: "Annual consumers price inflation will likely increase towards the top of the Monetary Policy Committee’s 1% to 3% target band over mid-2025. However, with spare productive capacity in the economy and declining domestic inflation pressures, headline inflation is expected to remain in the band and return to around 2% by early 2026."
And the latest SPI figures would appear to confirm that this spike is happening. A key thing now is whether such very visible increases in the prices of essentials will prompt re-ignition of 'inflationary expectations', which could then prompt a new wave of price rises.
ASB senior economist Mark Smith said in the latest SPI higher prices for food, household energy, and airfares more than offset falls for tobacco & alcohol, accommodation and fuel.
The ASB economists have "pencilled in" a 2.8% figure for annual CPI inflation for the June quarter.
"We also expect 3%+ annual CPI inflation in Q3 (we currently have 3.1% yoy) but note there are good reasons to expect inflation to move lower by year end and into 2026.
"This is not without risk, with the possibility that the uptick in inflation proves to be more persistent than transitory, providing an unwelcome lift to inflation expectations that central banks have worked arduously to re-anchor post-Covid," Smith said.
Higher prices for the grocery food group and the meat, poultry, and fish group contributed most to the annual increase in food prices, up 4.7% and 6.4%, respectively, Stats NZ said.
The price increase for the grocery food group was due to higher prices for milk, butter, and cheese.
"Dairy products continue to drive the higher cost in food prices," Stats NZ's prices and deflators spokesperson Nicola Growden said.
The average price for:
- milk was $4.57 per 2 litres, up 14.3% annually
- butter was $8.60 per 500 grams, up 46.5% annually
- cheese was $13.04 per 1 kilogram block, up 30.0% annually.
“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.
In terms of the actual month of June food prices were up 1.2%, following a 0.5% rise in May 2025.
Higher prices for the fruit and vegetables group and the grocery foods group drove the increase in food prices for June 2025, up 5.0% and 0.8%, respectively.
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.
Here is the detailed SPI information as supplied by Stats NZ:
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