13 Apr 2012

Dairy products getting cheaper

9:58 pm on 13 April 2012

Butter and cheese are becoming less expensive for shoppers as global dairy prices slump, but consumer advocates say New Zealand's big supermarket chains could still be making excessive profits.

Economists say a global glut of dairy products is having a trickle-down effect for local retail prices.

Statistics New Zealand's Food Price index for February this year shows the price of milk is down 1.8%, while cheese has dropped 8.4%.

The index says the price of two litres of milk for the month dropped to $3.61, while 500 grams of butter is down to $3.86. Cheese has frequently been priced about $9 per kilogram.

Consumer New Zealand chief executive Sue Chetwin says the price fall is welcome news for families.

However, she says the big supermarket chains, Progressive and Foodstuffs, are very secretive about the profit they make on dairy products, and retail prices should be falling further on the back of international prices.

No one from Progressive was available for comment on Friday. In a written statement Foodstuffs says it works with suppliers to get the best deals and passes on savings to customers.

BNZ agri-economist Doug Steel says international dairy prices have fallen about 8% since August last year.

Mr Steel says the prices of milk powder is holding up better because developing countries are still buying it.

He says prices for butter and cheese have fallen faster as consumers in Europe and the United States tighten their belts.

Doug Steel says whether demand increases enough to eat up supply will determine prices over the next year.