New Zealand Businesses Using Economic Excuses to Raise Prices

Excuseflation is a term used to describe when businesses use economic downturns as an excuse to raise prices, even if their own costs haven't increased. Financial journalist Frances Cook explains this phenomenon and advises consumers on how to protect themselves.

Cook cites two recent ads as examples of excusflation: one for a tech retailer that told customers to buy a TV now because prices would soon rise, and another for furniture that claimed oil prices were going up and therefore they should buy the product quickly. Cook argues that these ads are not just about selling products but also about creating fear among consumers.

The Reserve Bank has surveyed businesses in New Zealand since 1963 and found a significant change in pricing strategy over time. When costs and demand rise, 85% of businesses raise their prices. However, when costs fall and demand decreases, only 9% of businesses lower their prices. This trend suggests that excusflation is becoming more common.

Cook advises consumers to be alert and shop around to avoid being taken advantage of by excusflation. She recommends using online tools such as Powerswitch.org.nz or billy.govt.nz for power bills, Grocer or Price Pulse for food prices, and Gaspy for fuel. By shopping around and being willing to switch providers if necessary, consumers can push back against excusflation.