NZ businesses are passing on higher prices as energy pressures mount, ASB survey finds

A survey undertaken by ASB has found more than two-thirds of businesses are concerned about current and future energy expenses, leading to a third of them passing these costs onto customers.

ASB’s survey of 406 business leaders found seven in 10 businesses considered energy to be a major or actively managed cost for their organisation, while the same proportion reported their energy costs had increased compared with two years ago.

The survey found 73% of respondents were worried about current energy costs, just behind general economic uncertainty at 79%.

ASB corporate banking executive general manager Jonathan Oram said the survey’s findings signalled firms need to treat energy as a business issue, not an operational cost.

“Businesses clearly recognise the growing challenges posed by rising energy costs and potential supply disruptions, driven by declining domestic gas reserves, the Middle Eastern conflict, and global political uncertainty, yet many are not taking action,” he said.

“Businesses are already reporting that energy costs and uncertainty are shaping decisions on pricing, production, hiring, and investment.​”

Nearly one-third of respondents (31%) said they had raised prices because of energy costs or supply uncertainty, while one in five businesses had reduced production, hours or output.

While nearly two-thirds (64%) believed their business is well equipped to keep operating through a prolonged power outage, only just over a third of respondents (37%) reported they could continue operating for more than three days if their primary energy source was down.

Fuel was also the single biggest energy worry for 77% of businesses in the survey. Construction & Trade businesses were particularly concerned about the price of gas (64%) and the reliability of their electricity supply (59%).

Statistics NZ’s Consumers Price Index (CPI), which measures annual inflation, found petrol costs were the largest contributor to the annual inflation rate in the June quarter, up 27.5%, while electricity costs rose 12%. Annual inflation increased to 4.1% in the June quarter. 

More than a quarter of businesses (28%) in ASB's survey identified energy as a risk but didn't yet have a plan in place to address it. Almost half of the survey respondents (43%) cited upfront cost as the biggest obstacle to investing in energy resilience.

“This creates a series of important gaps that warrant attention: a gap between awareness and action, a gap between perceived preparedness and actual resilience, and ultimately a gap between today's priorities and tomorrow's challenges,” Oram said.

“The businesses that thrive in the years ahead will be those that prepare early, invest thoughtfully, and build resilience over time.”