'Cost shock': Strait of Hormuz closure hits more than fuel prices - ASB

ASB says the closure of the Strait of Hormuz is delivering a cost shock that reaches well beyond the price at the petrol pump.

The strait is one of the world's most important shipping chokepoints, and any disruption feeds quickly into oil markets. But the bank's economists argue the bigger issue for New Zealand households and businesses is the second-round effect: freight, insurance, fertiliser, plastics, packaging and food processing all carry an energy cost.

For a small, distant trading nation, higher shipping and fuel costs raise the landed price of imports and squeeze exporters facing the same freight bill in reverse. Businesses with thin margins have the least room to absorb the change.

The analysis lands at an awkward point for inflation, which had been easing. Energy-driven price rises tend to move through the economy over months rather than weeks, complicating both household budgeting and monetary policy judgements.

Economists say the duration of the disruption matters more than the initial spike. A short interruption can be absorbed; a sustained closure would reshape cost structures across the economy.