Palmerston North business owners 'struggle' through record-high inflation
Thursday, 3 February 2022
Manawatū businesses are feeling the impact of record-high inflation as they battle supply issues and price hikes while trying to entice customers into their stores.
Increasing costs have vastly outpaced wage growth, leaving local businesses with more expenses and fewer customers.
After two years of lockdowns and capacity limits, this is another blow to an already struggling part of the economy.
Cafe Express head chef Suzie Richards said life was more expensive now.
**READ MORE:
* Inflation: National blames 'dumb' Government spending for rising prices, Government blames globe
* Price of broccoli hits a record high in July, Stats NZ says
* Why the $1 loaf of bread is a thing of the past
**
“We’ve had to put our coffee up about 10 cents in the last year. It’s definitely getting more expensive to get supplies but it's either that or we have shortages”.
Cafe Express is only one of many businesses in Palmerston North’s Square struggling as inflation continues to grow.
According to Stats NZ, inflation has hit a record high of 5.9 per cent with wage growth lagging at 2.4 per cent.
Petrol prices in the region have also skyrocketed to an average of $2.30 per litre for 91, and a colossal $2.90 for 98.
Retailers are warning of price hikes if the trend continues.
Central Economic Development Agency (CEDA) chief executive Jerry Sherman said Manawatū was well-placed to come through this period, but there were challenges.
“Palmerston North you’d expect to reflect the national trends. We have labour shortage issues, increasing prices, increasing costs in building, increases in rental costs and housing and the region has among the highest number of properties for sale in the country.”
He said despite inflation, the region had good overall economic performance and was protected by a strong meat and dairy industry.
“And we still have a good tertiary education sector, good domestic tourism, a strong primary industries sector and a strong public works industry.”
Manawatū’s agricultural industry was expected to be the region’s saving grace.
According to CEDA, meat and dairy generates an average of about 830 jobs per annum and contributes over $120 million to the regional economy.
However, Sherman said the future was still uncertain.
“It’s difficult to predict what response the Reserve Bank will take and whether they’ll ease the cash rate.
“What we do know is the public sector hasn’t been affected so far.”
The Reserve Bank will reset the official cash rate on February 23, though economists from ANZ expect inflation to increase.
In The Square it’s been a tough two years for shop owners.
Jaspal Grewal, a technician at tech repair shop Gadget Express, said the price of getting goods in had jumped.
“Our costs for getting products in has increased, I’d say by about 20 per cent.
“There’s a lot of competition in our industry so we haven’t raised our prices because something is better than nothing.
“But we’re struggling.”
Angie Mitchell, of Be You, a clothing store on Broadway Ave, said it had been like a ghost town.
“I’m actually in talks with my accountant now. It’s costing me more to get the garments in and now the paywave has gone up $10 too.
“More and more shops are having to put racks on the street. We used to not do that because of theft but now we just need to get people through the door.”
She wanted people to support local shops and buy their products.
“Because we’re really struggling here.”
National leader Christopher Luxon said the biggest driver [of inflation] was 68 per cent increase in government spending.
He said the Government should reign in its spending to “avoid making tougher decisions that become much uglier as we go forward”.
Finance Minister Grant Robertson said it was global issue experienced by most countries.
Prime Minister Jacinda Ardern said high fuel prices were a result of international tensions and supply chain issues.