More than GST to hit pocket

Jess Bell will be cutting downloads. Photo / Herald on Sunday

Consumers will be hit by a double whammy as prices rise at the same time GST increases next month.

GST will increase by 2.5 per cent to 15 per cent on October 1. A Herald on Sunday survey reveals that some internet and cellphone providers, cafes and department stores will put up the price of their goods and services higher than the GST rise.

Business NZ chief executive Phil O'Reilly said it was possible businesses would pass on more than GST. Consumers would see a lot of companies saying an annual adjustment was needed, he said.

"It is a sensible thing for businesses to think about, given there is an administrative cost with the GST increase anyway."

Telecom's XT Mobile Business One Rate 1500 price will go from $499.95 to $511.06 including GST and One Rate 2500 will increase from $799.95 to $817.72.

The "One Rate" plan meant customers could call mobiles and landlines in New Zealand at any time of the day or night, paying the same flat per-minute rate, spokeswoman Emma-Kate Greer said.

Increases had been planned for October "to avoid going to these customers with price changes in consecutive months", she said.

XT mobile broadband prices will also be going up. Prepaid and postpaid 2GB broadband will increase from $59.95 to $61.06.

"While the GST increase obviously applies to all products and services, like many companies it is necessary for us to look at how it affects our pricing. The result is across our products, where it makes sense for current customers and for people thinking about joining Telecom, we are holding some price points, applying the GST increase directly or rounding up or down to simple price points," said Greer.

Internet service provider Woosh is also increasing prices for most of its plans.

"We will change a couple of our other prices. This is an opportunity to do that as well," Woosh general manager Richard Fry said. "We haven't reviewed our costs since five or so years so rather than sending out multiple letters we can do it at the same time." The prices had been rounded up for advertising purposes, he said.

"We are issuing a range of tidy-looking prices. An existing five gig broadband plan was $75.65 inclusive of the new GST rate, but we rounded it up to $75.95 to keep collateral and advertising easier."

Woosh's wireless broadband 1GB package will also be rounded up from $49 to $50.95.

Buying a cup of coffee will also cost more. NZ Coffee Roasters Association president Tony Kerridge said a survey of 100 coffee roasters nationwide showed 85 per cent were planning to increase the price of their coffee by 50c.

"Cafes have absorbed so many increases with milk and rent and the price of coffee has stayed the same," Kerridge said. Most cafes made about 30-50 per cent of their turnover from coffee, he said.

"There has been a real reluctance to increase prices as there is a lot of sensitivity around whether customers will come as often but it is an interesting product because it is something people purchase most days," Kerridge said.

Raw coffee beans had gone up by 35 per cent in the past three months and were at a 13-year high, while milk prices had also leapt 10 per cent.

Wellington's Caffe l'affare will put up its price by 50c for every cup of coffee, so a flat white will go from $3.50 to $4.

"We knew we were going to have to do it," marketing manager Jessica Godfrey said.

Mojo Coffee marketing manager James O'Connell-Cooper said it too would raise prices to cover GST and rising prices for beans and milk.

"It's at the point where it needs to happen and this is a convenient time to do it."

Newmarket Route 66 clothing store manager Todd Male said he would see if suppliers put up costs before deciding whether to pass that on.

Co-op Taxis' Ian Graham said it wanted to put up fares but was still waiting on approval from the New Zealand Transport Authority before doing so.

"We have applied to the NZTA to notify of the GST price change. Nothing else."

Double price rise 'unfair'

Auckland University political student Jess Bell, 21, said the broadband price increase at the same time GST went up was unfair.

"It seems maybe they are thinking people won't notice because prices are going up anyway. There are signs everywhere saying our prices are going up because of GST and people might not question it just thinking it is part of the GST price rise."

The cost of broadband was already expensive in New Zealand, she said.

Bell, who uses her parent's internet account, said she would not be directly affected by the prepaid 2GB Broadband plan going up from $59.95 to $61.06 including GST on October 1 but "it looks like I'm going to have to cut back on my downloads," she said.