Rotorua business owners say they have no choice but to pass on the minimum wage increase to customers.
From April 1, New Zealand's minimum wage rose $17.70 an hour, up $1.20 from $16.60.
The increase is the second in a year-and-a-half with further increases expected to reach a minimum wage of $20 by 2021.
Scope Rotorua café co-owner Steven Greer said it wasn't only the wage increase contributing to increased prices.
"The costs of many things are going up and wages are just one thing.
"Already this year we have had two increases in butter and dairy, realistically our costs are going up on almost every front.
"There is a limit as to what can be absorbed, unfortunately there has to be a flow-on effect to customers."
Greer's wife Dana Greer said, simply put, business owners were all in business for a reason.
"We can't let our profit margin continually decline while costs to us just seem to go up and up, the increases have to be passed on."
Reg Hennessy, Hospitality New Zealand Rotorua branch president and owner of Hennessy's Irish Bar, said the wage increases would impact on the hotel industry as a whole.
"We have annual increases from the breweries, our food suppliers increase costs, there's always something going up.
"As a publican, if you don't pass those costs on then you're a fool."
He said it wasn't so much about the bottom line but more about keeping things on an even keel.
Tāmati Coffey, Labour MP for Waiariki, described the increase as the largest rise in the minimum wage in Aotearoa's history.
"It will make a significant difference in the ability of Waiariki whānau to meet their everyday needs.
"Change that shares our nation's prosperity more fairly is why I got into politics. Paying people better for the work they do, is the number one priority that drove my partner Tim and I, to become Living Wage employers.
"Also sharing the increased minimum wage's launch date of April 1, were lower ACC levies, new domestic violence leave and a well-deserved boost for Superannuation."
Rotorua early childhood teacher Careena Corbett, said while she was happy to see the increase, she would also like to see wage increases across the board.
"I studied for three years to get my diploma and graduated with a student loan of more than $20,000.
"My hourly rate is higher than the minimum wage but I don't expect I'll be getting annual increases anytime soon. If the gap between the minimum wage and the wage earned by someone with a degree or diploma gets smaller, then why would people bother studying?"
She said her loan repayments of $70 made a decent dent in her weekly wage.
A Rotorua Budget Advisory Service spokesman said the $1.20 increase would make a difference.
"Every little bit helps. I would encourage people to think wisely about what they plan to do with the extra money."