Prices to soar as dollar falls, economists warn

“Travel is the most instantaneous thing to go up” … economist Shane Oliver. Photo: Jim Rice “If the dollar goes down, the prices of all imported appliances will go up” … Gerry Harvey.

The days of cheap overseas travel and attractive online prices are over, leading economists say. With the Australian dollar falling to a 33-month low on Thursday, travel and online retail prices are expected to soar immediately.

Petrol, whitegoods and electronic equipment prices are expected to rise by up to 10 per cent.

“Anything in a foreign price will go up straight away,” AMP Capital’s chief economist Shane Oliver said. “It’s the same with online suppliers. That price, when translated, will be higher than it was six week ago.”

Mr Oliver predicted travel expenses to rise by 10 per cent.

“Travel is the most instantaneous thing to go up,” he said.

“If you are booking hotels or transport or events in overseas countries, it will cost you more.”

But Flight Centre’s spokesman Haydn Long said the rise in travel prices would not be a “cause for concern” after several years of a high Australian dollar, as it would “basically bring us back to the average since the dollar floated”.

Imported whitegoods, furniture and electronics are expected to steadily rise, leading retailers said.

Consumer group Choice warned consumers against buying from companies that have suddenly put their prices up in reaction to the Australian dollar.

“Consumers should be sceptical of any local store that is suddenly charging higher prices because of the falling Australian dollar,” spokesman Tom Godfrey said.

“We know that with some products, like appliances, they have been in the country for months and in some cases even years. Day-to-day movements in the dollar don’t affect the price of something that has been sitting in a warehouse.”

Harvey Norman’s chairman, Gerry Harvey, said consumers would have a three-month period before imported goods would increase in price by up to 10 per cent.

“We’re negotiating with manufacturers as we speak,” he said. “Our prices will go up, everyone’s will.”

Mr Harvey said if the dollar dropped below 80 cents compared with the US dollar, consumers should expect a 25 per cent increase.

“Suppliers will either move fast or hold out on raising their prices, but regardless, if the dollar goes down, the prices of all imported appliances will go up.”

Mr Harvey said a basic washing machine costing $500 is expected to cost up to $550 in the coming months.

“But again, those prices haven’t been negotiated,” he said.

The owner of 2ndsworld, Peter Hammerman, said imported appliances such as front-load washers, air-conditioners, televisions and DVD players would “100 per cent” go up.

“They will all be affected across Australia with a fall in the dollar no matter the company,” he said.

Senior Westpac economist, Matthew Hassan, said the “deflation trend” that led to low prices across the retail and travel industries over the past 12 months was over.

The original release of this article first appeared on the website of Hangzhou Night Net.