Inflation is likely to trend upward as the Australian dollar falls.
The Australian dollar yesterday hit a five-year low of 80.71 US cents in overnight trade. As the local currency heads downward, prices are likely to head up.
Dun and Bradstreet’s Monthly Business Expectations Survey found a third of businesses say they are likely to increase costs. Forty per cent of wholesalers said they plan on raising their prices over the next three months, while only 1% said they would cut prices.
Dun and Bradstreet Australian and New Zealand CEO Gareth Jones said the Australian dollar’s decline had a “double-edge nature”.
While there has undoubtedly been a benefit for sections of the economy, such as manufacturers, the weaker dollar has introduced new cost pressures for businesses and industries that are reliant on imported goods,” he told the AAP.
"To cover these costs, many operations will be forced to lift their own prices, which will in turn flow through to other businesses and consumers alike."