Relentless Price Rises Are Not Your Imagination

A hike in the cost of everything from eggs to electricity is putting New Zealand businesses under extreme price pressure ahead of the holidays.

New data from StatsNZ revealed big increases in food and energy costs, with food prices up 4.7 per cent in the 12 months to October.

And energy price surges that have been driving inflation in New Zealand continue. – electricity bills are 11.8 per cent higher than one year ago and gas is 14.4 per cent more expensive.

“There have been 11 consecutive months of price increases for both electricity and gas,” Stats NZ prices and deflators spokesperson Nicola Growden said.

Rising Costs Start To Bite For Food-based Businesses

The strain on hospitality and food manufacturing businesses was most evident at breakfast time. “Those who enjoy eggs and coffee in the morning may have noticed them becoming more expensive,” Growden said. 

“The price of milk increased by 91 cents per 2 litres over the last two years. Eggs were up 8.8 percent, and coffee was up 12.4 percent over the same period.”

Cheese had risen to $12.71 per kg block – a staggering 30.1 per cent annual rise. Further blowing the budget for restaurants and cafés, meat, poultry and fish were up 7.6 per cent annually.

Kiwifruit had almost doubled in price in 12 months, while apples were also dearer. But there was brighter news for businesses buying vegetables.

“Vegetable prices fell 10.7 percent this month, with salad items such as lettuce, tomato, and cucumber becoming cheaper. This is the largest monthly price decrease for vegetables since November 2021,”  Growden said.  

Pay Packets Can’t Keep Up With Price Rises

On top of higher food and power bills, SMEs were also paying out more in wages. A recent Employment Hero Jobs Report revealed a median year-on-year wage rise of 3%, below the pace of food and energy cost increases. The short-term picture was even less comforting for workers, with a 1.4% decrease quarter-on-quarter.

Finding it hardest to make budgets stretch would be people in the bottom 10 jobs by hourly rate, including sales assistants ($23.90), retail staff ($24.00), kitchen hands ($24.80), sales associates and process workers ($26.20)

The Solution Is More Complicated Than A Pay Increase

The figures echo Employment Hero data that confirmed many SMEs were battling to balance budgets.

“Businesses that don’t have a cash buffer to deal with unexpected price rises are feeling it most,” said CEO and founder Ben Thompson.

He said people often understandably thought the answer to higher prices was higher wages but that created deeper, long term issues for everyone.

“That is what creates a wage price spiral where the cost of living exceeds the wage growth. When there are wage hikes for businesses, they need to put up prices to cover the increase and that leads to inflation getting away.

How Businesses Can Ride The Price Rise Rollercoaster

While there’s no quick fix, a few targeted steps can help ease the pressure.

• Review your biggest costs – check supplier contracts, compare utility providers and freight arrangements to ensure you’re not overpaying.
• Communicate clearly with customers – small, transparent price adjustments often land better than large, sudden ones.
• Support staff sustainably –  consider non-wage benefits or one-off bonuses rather than broad permanent pay increases.
• Improve efficiency – tools like Employment Hero can help automate admin and give better visibility over labour costs, freeing up time and reducing waste.

Prices may not fall quickly, but with good information and pragmatic adjustments, SMEs can remain resilient until conditions ease.