Today's budget is a significant step forward in terms of realigning the economy in favour of New Zealand's productive sectors, and creating a fairer tax system for all, according to Food and Grocery Council chief executive Katherine Rich.
"Changes to the GST system have a direct impact on the grocery sector, but these were signalled well in advance by the Government back in February. This has given the sector a head start in thinking about and preparing for the required changes," she said.
The Government announced today that GST would rise from 12.5 percent to 15 percent.
Mrs Rich said that the implementation date of October 1 allowed the council's members time to make the necessary changes to information systems and prices.
"There is no doubt that the increase in GST will lead to higher grocery bills for shoppers," she said.
"There is no escaping this fact. However, we are reassured by the accompanying income tax cuts which should compensate shoppers for the GST increase."
Mrs Rich said there would be significant pressure on prices over the next six months.
"The GST increase is just one factor, higher transport and electricity costs resulting from the emissions trading scheme are other factors, together with continual increases in prices for overseas sourced ingredients.
"However, the sector can only withhold increases in their costs for so long before they have to be passed on to consumers. This is the reality of living in a market economy and again emphasises the need to grow incomes."
