Rising fuel costs a risk to falling inflation figures

In News2 MinutesBy NZ Trucking magazineOctober 20, 2023

Ia Ara Aotearoa Transporting New Zealand is welcoming news this week that the annual inflation rate for the September quarter has fallen to 5.6%.

However, while the fall in the inflation rate is good news for consumers and businesses, the industry body is warning that increasing fuel costs due to international upheavals could put more upward pressures on costs for businesses and families.

“It’s good for everyone to see inflation heading downwards,” said Dom Kalasih, the interim chief executive officer of Transporting New Zealand.

“Unfortunately, there are still significant cost pressures affecting the transport sector, with costs increasing by 7.1% in the September quarter alone, driven by soaring fuel prices. We’re going to see significant pressure on freight costs, which our members have no choice but to pass onto their customers. Fuel is the second highest cost element for our members after wages.”

Kalasih said it is essential the incoming government helps to keep a lid on sector costs, including freezing road user charges and fuel excise duty.

“While we appreciate the pressure that the National Land Transport Fund is under, every increased cost our trucking members face must be passed through to consumers, who have enough to worry about,” he said.

“Road freight transport companies operate on razor thin margins, so our members aren’t in a position to absorb cost increases.

“It is vitally important that the new government maintain their commitment to pausing RUC and FED increases until cost pressures settle. Now isn’t the time to increase any charges that might see inflation get an upward kick again.”