Only small price rise expected in March

Press, 24 January 1984, Page 1

Only small price rise expected in March

By

GLENN HASZARD

The price of goods manufactured in New Zealand is not expected to increase much after the price freeze ends on March 1.

They will be held down by competition, consumer resistance, the fear of intervention by the Government or the Department of Trade and Industry, and because wages and fuel costs have been stable in the last year.

The Prime Minister, Sir Robert Muldoon, warned in October last year that if big increases were notified, the freeze would be restored on those commodities or services.

While some price rises appear inevitable, there is nothing to indicate that a price explosion will occur. Most manufacturers and suppliers are expected to pass on the increases in imported costs as they have been able to do during the price freeze. Those with no imported content are expected to wait until the outcome of the wages round later this year, before passing on cost increases as a result. Senior officers of the Department of Trade and Industry in Christchurch said yesterday that they were not aware of any big price rises in the pipeline. Mr Gordon Rudd, the regional director of the department, said that spot checks would continue to be made by inspectors. The department Would also be receptive to complaints by the public if people thought that any price rises were unjustified. Mr Don Sollitt, general manager of PDL Industries, said that the company had no plans for a major price rise after February 29. Prices had been set for most consumer products such as heaters and the prices of most other goods would probably be held down by the effect of competition, he said. Competition is also expected to restrict price rises in the fashion industry, according to spokesmen for both Lane Walker Rudkin, Ltd, and Deane Apparel. Prices for summer goods have already been set, so it will not' be until May or June that the manufacturers are expected to evaluate their costs and assess whether price increases are necessary. Sales of white ware such

as refrigerators, stoves, washing machines, and tumble driers have been brisk, but fears of big price rises appear unjustified.

Mr Don Rowlands, managing director of Fisher and Paykel in Auckland, said that the company had no plans to rush into big price increases when the price freeze was lifted.

Some costs, especially imported ones, Ijad had to be absorbed during the price freeze, but there had been no wage increases. Prices would have to be adjusted for some lines, but increases would be small.

“Any that we do have will look very well when stacked alongside the consumer price index,” said Mr Rowlands.

Fisher and Paykel is New Zealand’s biggest manufacturer of whiteware and exports to Australia, the Middle East and other countries.

Mr Rowlands said that a lot of money had been spent in the last three or four years to make the manufacturing plant more efficient and there was a lot of competition from Australia which kept prices competitive.

Electrolux, Ltd, will be increasing the price of vacuum cleaners after the price freeze is lifted, and has already applied for approval, but the company has declined to reveal details of the size of the increase. Both Firestone Tire and Rubber Company at Papanui and Lion Breweries in Wellington have yet to decide whether price increases will be necessary.

A substantial number of commonly used goods will not be covered by the new price regulations which come into effect on March 1 and replace the price freeze.

Among those which are not covered are cement, chemicals, drugs, fertilisers, certain hardware items, motor vehicles, food such as bananas, sugar, flour and canned food, certain ceramic goods, and freightforwarding. They are on what is called the “positive list,” set out in the Gazette notice

pursuant to section 82 of the Commerce Act, 1975.

The latest price regulations, officially called the Economic Stabilisation (Prices) Regulations, and available from Government Bookshops say in their Third Schedule that they do not affect the Commerce Act.

A spokesman for the Trade and Industry Department in Wellington said this meant that manufacturers and suppliers of goods on the “positive list” did not have to comply with provisions of the new regulations. Those with goods not on the positive list and not exempt under the new regulations’ Fourth Schedule must notify the department 20 days before raising prices if their annual turnover is above a certain figure.

For manufacturers this is $lO million, for suppliers it is $3 million, and for importers, wholesalers and retailers $6.5 million. Businessmen with turnovers less than this are free after March 1 to increase their prices as much as competition and consumer resistance allows, subject to later intervention by the Trade and Industry Department if it feels the increase unwarranted or excessive. Senior , officers of the department have not yet completed the ground rules for price increases of goods on the “positive list.”

A spokesman said that it was probably fair to say that businesses under this category would continue to apply under section 92 of the Commerce Act for approval for a price increase.

The secretary of the department has broad powers under the act to approve increases, and it is expected that business people affected by the Commerce Act but not the new regulations will be treated in a similar way to those without goods on the “positive list.”

In other words, they will be permitted two increases a year, at a level which the Secretary determines is reasonable in all the circumstances.

Government charges are not subject to the new regulations. Also exempted are second-hand goods, goods sold directly for export, services provided by charitable or religious institutions for care and accommodation, and goods and services sup£l by local or public es except those sold customarily in competition with other businesses.

Suppliers or manufacturers of fresh meat, frozen meat (except poultry) fish, livestock and goods sold by auction are not bound to notify price increases or to limit them to twice a year, but are subject to any order by the Secretary determining minimum prices fixing a percentage 'or monetary margin, or prescribing terms and conditions of supply-