Source: Radio New Zealand
Rising oil prices are expecting to put pressure on prices across New Zealand.
But from food to coffee and petrol to clothes, what are sectors expecting?
RNZ set out to ask.
Petrol
Mike Newton, spokesperson for fuel monitoring app Gaspy, said if crude oil prices were to remain at Thursday afternoon levels, after rising 10 percent overnight, the national average price for 91 would be about $3.30 a litre.
That was about 15c more than the average at the time but some petrol stations were already charging at that level.
A $4 national average for 91 might not be out of the question. Nick Monro
“Some economists and analysts are talking about crude rising ot US$200 a barrel and if that were to happen a $4 national average would not be out of the question. Early on in the Russian invasion of Ukraine, crude topped out at US$119 a barrel.”
Restaurants
Nicola Waldren, general manager of the Restaurants Association said it had been talking to restaurant and cafe members over the past few weeks.
“What we’re hearing at this stage is that significant price changes haven’t come through to them yet so they are in a bit of a wait and see. There are still a lot of unknowns about how long the impacts are going to go on for but we are firmly of the view that prices will get passed through to businesses.”
Restaurants are in a “wait and see” as to whether price rises will impact the industry. Supplied/San Ray
She said the association was advising restaurants to look at their menus, keep ahead of supplier bills and be across price changes coming through so they could adapt if they needed to.
“How much it might change is a difficult thing to answer because all the businesses are different, they’ve got different menus, they’ve got different supply chains… but hospitality businesses are small, they’re local businesses, we’re slowly coming out of some really tough years and now we’re facing this unexpected headwind.
“If it’s a sustained period of time when those cost pressures come on then we can expect some changes to pricing.”
She said restaurants were aware many households were squeezed in terms of what they could afford to pay but many hospitality businesses were working with such small margins that they would need to pass on increases.
Waldren said some businesses were concerned about being able to access products.
“Businesses are looking at are there ways to adapt their menus, source alternative ingredients… there’s a big focus on sourcing local from local suppliers that will probably help to mitigate some impacts but I think the fuel price changes are going to affect the whole supply chain.”
Coffee
Richard Corney of Flight Coffee said coffee bean prices had dropped from record highs but were still high compared to the past.
But there were concerns about the cost of everything else rising to push up the price of coffee in New Zealand cafes, he said.
Packaging and shipping costs have risen for the coffee industry. 123rf
“We’re already seeing shipping cost skyrocket back to pandemic levels, adding huge differential costs per kilo to landed coffee imports in NZ.
“Beyond that, packaging companies have alerted us to increase in packaging costs due to the constraint of plastics derived from oil.
“And to top it all off, in the coming months Brazil will need fertilisers to fed next year’s crop, and there’s major constraints on this due to the conflict in the Middle East – so what’s in effect been a great harvest out of Brazil, now faces existential threats that may very well force the commodity price higher or keep it at elevated levels.”
Fuel shortages could also make it hard to move coffee from storage locations to where it needed to be, he said.
But he said coffee prices were already getting to their limit in terms of what consumer would pay.
“We’re discovering, if not some parts of it’s been discovered, the ceiling of what consumers are able to pay … it becomes a point where the market will dictate its value.
“We’ve asked a lot from our customers and they’ve responded wonderfully but you can only go so high, right? You can only pass on so much before it becomes unsustainable.”
Construction
Auckland University of Technology construction expert John Tookey said the cost of building would rise.
“Anything that involves either the formation of materials or the transportation of materials is going to be massively affected … the kicker as far as construction materials are concerned is simply the fact that they tend to be high volume, low value and they are very energy intensive to transport.”
Experts predict the price of building will rise. RNZ / Nate McKinnon
He said prices would probably rise in anticipation.
“Stockists start hedging knowing that it’s going to start creeping up… they’ll start to feed that into their quoted prices.
“We’re already seeing the cost of diesel at the pump going up and as soon as diesel starts going up then transportation of materials goes up and up and up.”
He said he did not want to guess at how much construction prices would rise.
“I think that sort of prediction would age like milk in the sun.”
Retail
Carolyn Young, chief executive of Retail NZ, said the sector was already seeing increases in distribution costs and for things such as couriers.
“It’s a higher impact on goods and services being moved around the country because a lot of freight companies are using trucks that run on diesel.”
She said supermarkets, grocery retailers, fruit and vegetable outlets and bakeries would have increased transport costs and might not be able to absorb them.
The retail sector is already seeing price increases. Ke-Xin Li / RNZ
“Some will and some won’t. It will depend on the profitability of the business and the reserves they may have,”
People bringing in goods from overseas would also be affected.
“In terms of grocery,. they’ve got good supply of stock in the distribution centres but stock is always coming in.”
For things such as apparel or DIY or jewellery, she said, freight ships were staying in Singapore longer to make sure they were 100 percent full.
“The longer they take to leave port and fill up, the higher the cost of the fuel being passed on.
“If you are importing goods they’re going to land in Auckland, Tauranga or Lyttleton then they’re going to be distributed to your site or sites – so there’s two lots of costs that can be passed on a that point as well because you’ve got costs coming in internationally and then you’ve got domestic costs from the price of fuel in New Zealand.”
She said prices would rise if it was a sustained conflict.
“Retailers that are able to absorb as long as they can – it will impact their margins long-term and their profitability.”
Earlier, Infometrics chief forecaster Gareth Kiernan said fishing was particularly exposed to oil price rises.
BNZ chief economist Mike Jones said food prices were likely to rise faster but it was hard to quantify. He expected general inflation to peak at 3.8 percent in the second quarter.
Uber
Uber said fuel price increases were having an effect across a wide range of industries, including for driver partners and delivery people who used the Uber and Uber Eats app to earn.
“Uber is actively monitoring conditions as they evolve and regularly reviews ways to support driver partners and delivery people as circumstances change.
“We are always looking for ways we can continue to support them, including our Uber Pro programme which offers discounts on fuel and EV charging, as well as other savings to help reduce their expenses.”
Supermarket delivery
At Woolworths, a spokesperson said it was closely monitoring the situation in the Middle East.
“We have no current plans to change our delivery fees.”
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
