High dollar doesn't equal bargain for shoppers

Photo / Dean Purcell

Although kiwi at near record against Aussie, importers probably bought products at fixed exchange rate a long time ago

The New Zealand dollar is trading near a record high against the Australian currency but that doesn't necessarily mean bargains for shoppers, a consumer expert says.

Last night, the New Zealand dollar was buying 95.53 Australian cents.

Consumer NZ chief executive Sue Chetwin said Kiwis had already been seeing cheap pricing with the strong dollar, but the retail sector had likely paid for the goods at a fixed exchange rate many months ago.

"Particularly electronic goods, New Zealand will be paying cheaper prices for them, and anything we import. We have been getting the benefit of that for some time."

Shoppers could expect to see good deals if the dollar remained the same, but she wasn't hopeful.

"They should be dropping their prices, but I will wait to see that."

Ms Chetwin accepted companies experienced myriad costs and taxes, but were unlikely to be trading in Australian money.

This week, the Herald visited several Australian-owned retail outlets in Hamilton, about half of which had Australian and NZ price tags.

At Dotti and Jayjays, only their jewellery had the two different prices, while their clothing stipulated Kiwi prices. Other retailers, including Cue, Strandbags and Equip, listed both.

Ms Chetwin said the public was often left out of pocket when there were two different pricings.

"In most cases there's an Australian price, and a New Zealand price that is generally more expensive."

ASB chief economist Nick Tuffley said whether consumers benefited from the exchange rate movement would depend on where goods were sourced and what currency was used to buy them.

"If you're buying goods from China, for example, then ultimately you are most likely to have a contractual agreement to pay a US dollar price. So the exchange rate that could be relevant could be the US dollar."

That could mean prices could go up as well as down.

"If you're looking at exchange rate movements and asking why aren't they putting their prices down because we're up against the Aussie dollar, you could just as easily be asking them why they haven't put their prices up because we've fallen against the US dollar."

However, the Retailers Association said it was unrealistic for overseas firms to base their prices simply on what the exchange rate was.

"Most importers will have some sort of foreign currency hedging in place so the prices are pretty fixed from the time they place the order generally," said Greg Harford, general manager of public affairs.

"The exchange rate is certainly a component of price but it's not the whole price," he said.

"There's a number of costs which are incurred in New Zealand in New Zealand dollars and it will be the same in Australia, to do with rent and taxes and staff and the cost of regulation and all those things that are actually quite significant overheads in a retail business."

One eye on the budget

Jenny Dilley is a mother of six and grandmother of 12, so she's no stranger to shopping.

That doesn't mean she loves it, though, but she will buy products for her brood when she has to, no questions asked.

"I'm always shopping, there's always a need in the family that you want to contribute to and we often get the best bargains for quality goods as well because we certainly want that."

As for quality over price, Mrs Dilley, from Morrinsville, said it came down to need and budget. "Depends on what it is. If it's something that I want to last then I would look at quality, but that depends on what I have to spend as well. I'm not into labels unless it suits my needs and budget."

She admits to not being "clued up" on financial news and was only likely to know what the exchange rate was doing if she had to buy foreign currency for a trip.

So when asked to comment about the state of the Australian dollar and possible savings to consumers, Mrs Dilley said there should be, but only if it was realistic: if retailers could reduce their prices then they should.