Some budget advisers and food banks are warning that people on low incomes will be worst affected by the rising cost of food.
Prices are forecast to rise further, in part because of expected strengthening in export profits.
The director of the Wellington Downtown Community Ministry, Stephanie McIntyre, says many households are already struggling to make ends meet.
She says the agency has already seen a huge increase in the number of people relying on food parcels.
The head of the Federation of Family Budgeting Services, Raewyn Fox, says when basic food prices rise, many families are forced to cut back the amount they feed their children.
She says there should be price controls or tax relief on basic foods like milk and bread.
Federated Farmers says international dairy prices rose 7.1% in December, driven by demand from stronger economies around the world.
The United Nations' food price index shows the cost of basic foods, including meat and dairy products, oil, sugar and cereals has gone above its previous peak in 2008, when there were food riots in some developing countries.
