Slippery slope of butter prices
A more than 50% surge in the price of butter is a "frightening" sign the hospitality industry is doing it tough, a Dunedin business owner says.
"Butter, cheese, milk — they're becoming luxuries," Speight's Ale House Dunedin owner Mark Scully said.
According to figures released by Stats NZ yesterday, food prices in May increased 4.4% in the past year, on the back of a 3.7% annual rise in April.
Higher prices for the grocery food group and meat, poultry and fish group contributed the most, rising 5.2% and 5.4% respectively.
Butter, cheese and milk prices were cited as the cause.
The average price of butter last month was $8.42 per 500g, a 51.2% annual increase.
"The cost of a 500g block of butter is nearly twice as expensive as the lower prices seen in early 2024," prices and deflators spokeswoman Nicola Growden said.
Cheese was $13.04 per 1kg block, up 30.1% year-on-year, while milk was $4.57 per 2 litres, up 15.1%.
The average prices of beef steak and beef mince were up 18.6% and 13%, respectively.
Mr Scully, who is also Hospitality New Zealand's Otago branch president, said he was surprised the average price of butter had become so high.
"I knew it was going up, but that is a frightening stat, isn't it?"
The price of butter had seen a "real hype" in the past 12 to 18 months, and protein and dairy costs had been particularly tough for businesses.
Nobody wanted to have to close their business, but it did appear to be a reasonably regular occurrence around the country, Mr Scully said.
"But it's like anything, you just have to be brave and ultimately pass it on to the consumer or else your margins just don't stack up."
Ayrburn general manager Kieran Turnbull said the hospitality precinct had seen a steady rise in food prices across the board since the Covid-19 pandemic, but there had been a "real noticeable increase" in the price of butter this year.
"Everyone needs butter ... butter goes into everything.
"It goes into your scone, it goes into your pastries, it goes into your desserts, it goes into sauces — so it's a cost that flows right through."
While prices were always changing in hospitality, Mr Turnbull believed the costs put on to consumers were being "more acutely felt" than at other times.
"That's probably why it's so tough at the moment for a lot of operators."
The precinct, located between Arrowtown and Lake Hayes, has nine distinct venues.
Having a range of offerings allowed it to absorb costs in one outlet while letting them rise in another, but at the cost of providing so many offerings, Mr Turnbull said.
Supermarkets were also continuing to "artificially set the expectations for the New Zealand consumer of what things cost".
"And that directly affects hospitality."
tim.scott@odt.co.nz
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