Economists are warning that costs across all sectors are likely to increase as a result of measures initiated by the Government, with particular emphasis being placed on higher wage bills as a result of minimum wage increases. 

Although these will have a positive effect on the pay packets of the lowest-paid workers, there is likely to be a knock-on effect as people higher up the scale expect more to maintain the differential between the low-skilled and higher-skilled. 

According to Retail NZ’s retail Radar report, a quarterly survey among retailers which canvasses issues and business sentiment in the sector, the wage increases are going to affect the input prices of all goods produced in New Zealand. 

At the same time increased pressure on the value of imports, with the fluctuation around the New Zealand dollar and higher business costs around insurance and compliance, was putting a squeeze on retailers’ margins, says Retail NZ interim chief executive Greg Harford. 

The outcome will be felt in the automotive sector as much as anywhere else. Car servicing is in many cases already a “grudge purchase”, and with increased pressure on pay packets to buy food and other commodities, it seems likely many people will put off servicing their cars for as long as possible to save money. 

The new car market is already starting to soften, with sales for March 5.4 percent lower than this time last year, and the whole market 3.7 percent down on the first three months of 2018. And it’s likely used car sales will follow. 

Says MIA CEO David Crawford: “It indicates that after a sustained period of growth the 2019 market is likely to be down on last year.” 

Faced with what might well be a bleak winter for some, today might be a good time to dust off those “special offers” and start attracting customers into your workshops before they start feeling the pinch.