31 Jan 2022

Retailers warn of price hikes amid 'massive pressures' on costs

1:13 pm on 31 January 2022

Shoppers are about to face even higher prices with retailers planning price increases over the next three months.

People shopping at Sylvia park keeping social distancing

(File photo) People shopping at Sylvia Park. Photo: RNZ/ Marika Khabazi

Retail NZ chief executive Greg Harford told Morning Report a new survey showed on average three quarters of retailers expected to put prices up by 7.5 percent.

He said businesses could no longer contain the rising costs.

"We're seeing massive pressures across the cost structure of running retail businesses."

He said it cost more to source products, import them to New Zealand and to do business locally, and retailers had no choice but to raise prices.

"It's no surprise that we're going to start to see some of those price changes in part being passed to customers.

"We are at a point now where there's such pressure building we are going to see prices moving. The fact that nearly two-thirds of our members are telling us they put prices up in the last quarter is really a signal of that and we are likely to see more of it."

But there were other cost pressures like the government pushing for a big hike in wage rates, he said.

"The price of fuel is a really significant cost."

He said retailers were looking at automation and technology to keep costs down, but that "often comes at the expense of workers".

Inflation has hit its highest level in 30 years as consumer prices rose 1.4 percent in the three months ended December, taking the annual rate to 5.9 percent.

The Reserve Bank has to try to keep inflation between 1 percent and 3 percent.

With it now nearly three times that, the bank is expected to keep raising the cost of borrowing for some time.

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