By Emma Jolliff
At Mojo a cup of coffee typically costs $3.80, the rise in GST, they say, will push that up to $3.88, not an easy price to charge when the smallest coin now available is a ten cent piece
“Which is quite a silly price for a cup of coffee so there will be some rounding in there which will put it up,” says James O’Connell-Cooper, Mojo marketing manager.
He says rising milk and raw coffee prices are already squeezing margins.
“I would say that a lot of cafes will take the opportunity to push their prices up because they've been holding off for the last wee while,” says Mr O’Connell-Cooper.
Appliance retailer Noel Leeming is already urging buyers to act before the hike as history tells them buyers will.
“When it increased in 1989 from 10-12.5 percent, there was a 35 percent increase that month preceding the raise, so absolutely we expect quite a significant increase over the coming months,” says Jason Bell, Noel Leeming manager.
The Retailers Association says some GST inclusive prices like groceries and petrol will see a 2.2 percent rise across the board but other retailers have some flexibility.
“If goods are currently selling at $49.95 I can't think of any retailer that's going to go out and charge $51.06, it's not a logical price point, so they may well hold off on some items and keep them at $49.95,” says John Albertson, retailer.
“No we won't have price points that are unfriendly retail price points, especially in the small ticket items,” says Jason Bell, retailer.
But he hints there may need to be bigger increases on more expensive items to make up for it.
The government's expecting that spike in prices though.
“There is a one-off effect to the inflation rate because of the hike in GST, says Prime Minister John Key.
But he says the Reserve Bank plans to ignore that one-off so that it won't put pressure on interest rates.
3 News