Retailers may need to raise prices if unrest in the Middle East continues for a sustained period, Carolyn Young, CEO of Retail NZ, said.
Young said retailers are monitoring developments in Iran, as other sectors are doing. Alongside the loss of life, the conflict is starting to have implications for transport and fuel sources.
In the past, disruptions to shipping routes and oil supply linked to tensions in the Middle East have affected New Zealand. While the impact has not yet reached the retail sector, she said fuel prices and shipping costs could rise if the conflict continues.
“Retailers have had an incredibly tough trading environment over several years,” she said. “Many of our members are still struggling and cannot afford to absorb additional costs, particularly over a prolonged period.”
Young said retailers try to absorb small cost increases where possible, but their ability to do so is limited. “Higher prices are not something any of us want,” she added.
In the current economic environment, many business owners have limited capacity to buffer against the impact of a global crisis. If the conflict continues, part of the increase may be passed on to consumers.
