Industries hit hardest by inflation surging

Inflation is at the highest rate since June 1990, but experts say certain industries will feel more pain than others.

Inflation reached 7.3% in the year to June 30 Stats NZ said on Monday. That meant the buying power of the dollar had dropped by the largest amount in over 30 years. But Infometrics principal economist Brad Olsen said inflationary pressures were not spread evenly across the economy.

The transport, construction and hospitality sectors would be hit the hardest by inflation, Olsen said.

Transport

The key issue for the transport sector was the cost of fuel. Petrol prices rose 32% in the last year, while diesel prices were up 74%, Olsen said. But on top of that a labour shortage had also created issues. ‘‘They are still struggling to find truck drivers. But even other non-driving services in the transport sector such as vehicle servicing and logistics are getting harder to find,’’ he said.

Construction

A tight labour market and big increases to the price of building materials continued to add inflation in the construction sector, Olsen said. ‘‘I won’t mince words, things have continued to get worse. The fact that they had another quarterly jump in prices just reinforces how bad things are in this sector,’’ he said.

Ockham chief operating officer Ben Gibbens said it was feeling inflation bite in the cost of materials.

The price of aluminium, reinforced steel and concrete had all risen in the last quarter, putting increased cost pressure on construction firms, he said.

Hospitality

The ‘‘double whammy’’ of higher cost of food, and consumers cutting discretionary spending would hurt the hospitality sector, Olsen said.

‘‘As interest rates rise, spending patterns change. Unfortunately for a lot of people when they feel the pinch one of the first things they cut spending on is going out to eat,’’ he said.