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Milk prices soar 42% since 2007

Published: 2:34PM Monday April 11, 2011 Source: ONE News

Milk prices have risen 42% in just over three-and-a-half years and 9.5% in the past year, according to long-term tracking done by Statistics New Zealand.

It says the average price of milk actually fell in 2006 and was down to $2.60 a litre in June 2007, before rising over the following 15 months to $3.37 in September 2008, reflecting a jump in world dairy prices.

Prices then drifted down to $3.16 from September 2008 to November 2009 as world dairy prices fell from their peaks, before turning around and rising again to their highest level of $3.68 by February 2011.

The price in February was 9.5% higher than a year earlier and 42% higher than in June 2007.

Prices in February ranged from $2.90 to nearly $6.00, with one in two prices being between $3.50 and $3.75.

Statistics New Zealand says if consumers had shopped around, they would have found the cheapest milk at dairies or service stations, but they may also have had to pay relatively high prices. Nine of the 10 cheapest prices, many of which were based on discounted prices for two containers, were at dairies, grocers, superettes, or service stations, while the remaining one was at a supermarket.

However, seven prices were over $5.00, and these were at dairies, grocers, superettes, or service stations.

Five out of 10 dairy, grocer, and superette prices were below the overall average of $3.68, compared with two out of 10 service station prices. However, most supermarket prices were under $4.00, and eight in 10 were below the overall average of $3.68.

Fonterra and supermarket chains have since announced that domestic milk prices will not be raised for the rest of 2011.

Statistics NZ also says that although the February 2011 average price is the highest recorded in "nominal" terms, in "real" terms prices have at times been higher in the past.

For example, the average price of $2.37 in January 1994 is equivalent to $3.78 in February 2011, and the average price of $3.20 in January 2002 is equivalent to $4.18 in February 2011, after allowing for food price inflation.

In its article Tracking milk prices in the CPI, Statistics NZ looks at retail milk prices from the 1890s to February this year.

It shows previous generations of New Zealanders also had to contend with rises milk prices.

In the 1890s, a quart of milk, equivalent to 1.137 litres, retailed for just over three pence on average, which is under three cents in decimal currency terms. By 1915, the average price of a quart had risen to about four pence, and then by June 1950 the price had doubled to eight pence.

In 1975, the bottle size tracked in the CPI was formally changed from the imperial pint, equivalent to 568ml, to the metric size of 600ml. At that time, the average price of the 600ml bottle was 4.01 cents, equivalent to 39 cents - or $1.31 for two litres - in today's terms.