14 March 2022

Inflation the ‘biggest villain’ for Southern businesses

With a pandemic and international conflicts playing out, the “biggest villain” for Southland’s businesses for the next six months will be inflation, the Southland Business Chamber chief executive says.

The chamber this week released the findings of a confidence survey for the quarter ending February 2022.

It was carried out with its 590 members and 86% of the respondents considered the general business situation in New Zealand would deteriorate in the next six months.

Chief executive Sheree Carey said the figures did not surprise her because the survey was carried out when there were many uncertainties about the Government’s border plans Covid-19’s other effects.

She highlighted the main area of concern was the inflation, which was already affecting businesses.

About 57% of survey’s respondents said inflation was their main area of concern for the next six months as having the biggest effect on profit.

Other areas of concern included Covid-19 border restrictions and fuel costs for 42%, and Covid-19 level changes, interest rates, energy and staff costs for 29% of respondents.

“Inflation is already starting to hit hard, both businesses and our consumers. We may have opened the borders and may have made changes to be able to operate under Covid-19, but I think inflation is the new villain which businesses will most worry about.”

While rising commodity prices were good for New Zealand’s primary producers, it meant New Zealanders had to pay more for fuel and faced rising price inflation overall.

The increased costs for shipping, for example, had a huge impact for businesses across the region, she said.

“We are at the bottom of the world so to get our products out to anywhere, it has to go by truck, ship or whatever … All of those costs have gone up considerably.”

Many exporting businesses were needing to wear this extra inflation cost weighing on their products because they needed to remain competitive within international markets, she said.

However, Mrs Carey believed while the inflation concern would increase in the next survey, the confidence in businesses would improve slightly.

“It could be a bit more optimistic in the next few months due to the changes with levels and borders which are now in place since we undertook the survey , but we need to wait and see how it will all play out.”

Source: Otago Daily Times – 11 March 2022

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