New Zealand small-to-medium enterprises (SMEs) have expressed that they are feeling the pinch with rising inflation levels.
In a recent survey of 500 New Zealand SMEs by business software platform, MYOB, three quarters, or 75 percent of SMEs are concerned about inflation levels.
Inflation levels have reached an all-time high in New Zealand for the first time in 30 years. 41 percent of SMEs have expressed that they are “extremely concerned” and 34 percent says they are “quite concerned”.
Stats NZ revealed in April that inflation levels are now at 6.9 percent, the highest since June 1990.
In December 2021, inflation was recorded at 5.9 percent.
Stats NZ says the main driving force to the rise in inflation is due to the rising prices for construction and rentals in housing.
“Construction firms have been experiencing many supply-chain issues, higher labour costs, and also higher demand, which have pushed up the cost of building a new house,” says senior prices manager Aaron Beck from Stats NZ.
SMEs in the retail sector are the most concerned about inflation levels, with 79 percent having recorded their concern. This is then followed closely by construction SMEs with 78 percent, and then manufacturing with 75 percent.
Due to inflation, SMEs across the country have felt “negative impacts” on their businesses.
Seventy-four percent have experienced higher expenses due to rising costs needed to continue running their businesses. On the other hand, 43 percent of SMEs are experiencing a decrease in profits after trying to offer reasonable prices for customer.
Forty-three percent have also experienced pressure from staff to increase wages. This includes 63 percent of SMEs in the manufacturing sector experiencing pressure to increase wages.
Among the 500 SME’s surveyed, 34 percent have experienced reduced sales and increased prices resulting in not buying their usual stock.
The survey, taken before the budget announcement in May, also highlighted that 75 percent of SMEs believing the Government is not “taking enough action to help mitigate the impact of inflation” and that they could do more to “mitigate the impact of inflation”.
However, half of the SMEs surveyed – 56 percent, have also stated that the Reserve Bank of New Zealand is “not doing enough to help manage inflation”.
Recently, the government announced that they will be putting aside $100 million for a Business Growth Fund to support SMEs. The fund says it will “drive economic security, innovation and low-emissions growth”, however no further details have been released regarding the fund.