Foodstuffs owns the Four Square; New World, PAK'nSAVE, LiquorLand, and Gilmours stores. (file image) Photo: 123RF
Foodstuffs says it is a challenge to keep prices steady at the moment, with increasing costs for things such as power.
Wholesale power prices have made news in recent weeks because they have increased rapidly.
Since September 2021, wholesale prices have risen from about $100 per megawatt hour (MWh) to an average of about $700 per MWh this week.
Electric Kiwi last month stopped taking new customers because of the high prices.
Some major users of power, such as supermarket chains, are also exposed to the wholesale market via contracts for their electricity supply, which will reset higher as they come up for renewal.
Winstone Pulp International (WPI) paused work for 14 days at its two operational sites, Tangiwai Sawmill and Karioi Pulpmill, because of the pressure.
According to Stats NZ, electricity is 5.1 percent of supermarkets' input costs.
A spokesperson for Foodstuffs said it was feeling the impact of rising power prices, alongside other costs.
"In a bid to minimise these impacts now and into the future, we're working on our energy efficiency programmes including, upgrading retail air conditioning and ventilation systems, converting to LED lighting, and switching current refrigeration systems to a C02 system which is up to 30 percent more energy efficient.
"While we're working hard to absorb as much of these costs as we can, it's a challenge to keep prices steady in this environment. Our priority is to help New Zealanders shop within their budgets, and we're doing everything we can to make sure our customers can continue to get great value for their money."
(file image) Photo: RNZ / Richard Tindiller
Woolworths said it was not exposed to the volatility.
Retail industry commentator Chris Wilkinson, of First Retail Group, said the increases were challenging because the costs were hard to recoup.
Chris Wilkinson of consultancy First Retail. Photo: Supplied
"There's been incremental growth across all those outgoings for retailers, particularly things like insurance, wage costs and this will only compound challenges because retailers are very large users of power. Some retailers have been moving to alternative types such as solar but that really hasn't been at the scale that's happened overseas. They are very vulnerable."
He said there would be power bills for refrigeration, lighting and heating large spaces.
"At this time of the year, they're having to heat those environments to make the stores pleasant for staff and customers so that's a big challenge for them. And this isn't the strongest time of year for retail."
Blincoe said every business would be affected when their current contracts expired. "It depends how long they have left - but recontracting will see massive jumps."
Infometrics chief executive Brad Olsen said as well as higher power bills for their own operations, supermarkets would be affected because the producers and suppliers of food were also facing higher electricity prices and might need to increase what they charged for goods.
In some cases, where producers were not able to pass on their higher costs, there might be fewer products made, he said.
"It's not just higher prices but there's going to be lower productivity."
