Retail NZ Chief Executive Carolyn Young warns that ongoing Middle East unrest could force retailers to hike prices.
“Like many sectors, retailers are watching the events unfolding in Iran with concern,” Young said.
“The human impact of this violence is distressing and is also starting to have wider ramifications around transport and sources of fuel.”
“As we have seen before, when key shipping corridors are closed and oil supply chains are disrupted due to escalating tensions in the Middle East, New Zealand is not immune to the effects.”
“While we are yet to see those impacts flow through to retail, if the conflict persists, it will begin to affect fuel prices and shipping costs.”
Young noted that retailers attempt to absorb minor price hikes when possible, though their capacity to do so remains limited.
“Retailers have had an incredibly tough trading environment over several years. Many of our members are still struggling and cannot afford to absorb additional costs, particularly over a prolonged period.”
“Higher prices are not what any of us want to see, but in such a tight economic environment, there is minimal ability for many business owners to cushion the impact of such a global crisis.”
Young said if the conflict persists, some of those extra costs will inevitably be passed on to consumers.