By KARYN SCHERER
Customers across the country are being warned to brace themselves for a series of pre-Christmas price rises, as the plummeting kiwi bites into retailers' profits.
The Retail Merchants Association has already warned that price increases are on the way as smaller retailers without foreign-exchange hedging struggle with the higher cost of imported goods.
The association has called on the Government to rethink its five-year freeze on tariffs in the wake of the plunge and large retailers also confirmed yesterday that they were worried about the impact of the ailing dollar, and how it would affect Christmas sales.
While the major impact is likely to be on big-ticket items like furniture and appliances, supermarkets are also warning they cannot hold down their prices for much longer.
Some dairy companies have already raised the price of milk - a move that will affect many other grocery products - and meat prices have also increased over the past few months.
The cost of flour might also be affected if the kiwi continues to decline against the Australian dollar, which would in turn affect an array of products such as cakes and biscuits. The rises come on top of a poor growing season in Queensland that has pushed up the cost of produce.
Supermarkets are warning that a wide array of other goods are also likely to increase in price over the next few months, as the higher cost of imported goods puts the squeeze on already paper-thin margins.
Woolworths spokesman Des Flynn said the supermarket chain had been warned by its suppliers they could not hold their prices down much longer.
"Everyone's watching each other like a hawk and holding their breath ... We've had very little if any relating to fuel increases, but we expect change is imminent." He said the chain was also expecting some flow-on effects from the increased cost of imported goods.
Meanwhile, the country's largest appliance retailer, the Pacific Retail Group, is telling customers they are better off buying sooner rather than later.
Managing director Stefan Preston said the company, which runs the Noel Leeming, Bond & Bond and Computer City chains, hoped the falling prices of most technological products would offset the increases.
"Some things probably aren't going to be affected that much and others are going to be affected reasonably dramatically in line with the currency. Overall if the currency goes down prices go up - it's as simple as that."
Rival chain Harvey Norman is also hoping customers will be understanding about price rises. Its general manager of computers, Andrew Thompson, said yesterday that the chain had passed on a few price increases, but was expecting more.
Other retailers admit they are worried about a consumer backlash.
The Warehouse's chief operating officer, Greg Muir, said the company had tried to beat price rises by trying to strike better deals from its overseas suppliers. He said it was also looking harder at local suppliers. Next year's back-to-school products, for example, had been supplied by a New Zealand manufacturer for the first time.
Tomorrow: Fran O'Sullivan on international implications.
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