Fuel tax cut not helping supermarket food prices

Laura James
Source: 1News

The flow on effects from the fuel tax cut are yet to be seen in prices elsewhere.

Both Foodstuffs and Countdown told 1News they don’t expect grocery prices to be helped by the Government’s move to slash the price per litre by 25 cents earlier this week.

That's despite Finance Minister Grant Robertson expecting the contrary.

"One of the big costs that sits inside price increases for food, is fuel costs, so there is an impact with what we're doing with the fuel excise duty," he said.

But in a statement Foodstuffs said it hasn't increased prices on the shelf to reflect the increases in fuel costs in the last 12 months.

"It’s fairly challenging to isolate the impact of a reduction of fuel price on groceries, it’s a relatively small part of the total cost of an item, and while we welcome the Government’s excise tax reduction on fuel for New Zealanders... at this stage this is unlikely to have any direct effect on the price of staples at the supermarket."

A Countdown spokesperson said: "Regardless of the tax reduction for fuel, we’re continuing to see increased costs right across our business.

"There are a lot of factors that go into the price of food."

Consumer NZ's Jon Duffy agreed and said it's difficult to know if we will see any prices drop as a result of the fuel changes.

"I'd hope we'd see a small drop, but it's really difficult to tell.

"There's no obligation for companies to change pricing, companies are free to set prices at whatever level they want.

"We would hope if costs for companies are coming down, they would pass that onto consumers cause it's the right thing to do."

Over the weekend rideshare company Uber responded to the recent hike in fuel prices by adding a temporary surcharge.

"We welcome this step from the New Zealand government, but as fuel prices remain a concern for driver-partners on the road the 60 day temporary surcharge will remain," a spokesperson said.

"One hundred per cent of this temporary surcharge goes directly to driver-partners and will mean they will receive from riders about an extra 40 cents NZD on an average trip."

1News asked NZ Post how their charges have been effected by fuel price hike, and subsequent tax cut at the pump.

A spokesperson said: “Like most other operators in the transport, courier and freight industry, our arrangements with our contracted business customers provide for delivery prices to be adjusted as fuel prices move.

"This means the price fluctuates as fuel prices fluctuate."

While the Government is moving to reduce road user charges (RUC), in line with the fuel tax cut, it's not clear how it will help bring down freight costs.

Mainfreight said, "the reduction has no effect on the movement of freight.

"We are busy discussing this with [the Government] to get them to understand they need to address the price of diesel if they are to remove the inflationary pressure of fuel on freight."

The spokesperson said changing the RUC's "comes with difficulty".

"RUC’s are also legislated to need 42 days before they can be altered."

The Government is assuring the public that those facing road user charges will see three months of benefits from when change can be made.

But Mainfreight said, "the bureaucrats need to find a better way."

Energy and Resources Minister Megan Woods has urged them to wait and see how things work out.