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Australians warned to expect expensive Christmas

Posted October 7, 2008 07:34:00
Updated October 7, 2008 07:46:00

Tight Christmas ... selling price expectations are at a 10-year high (ABC News: Giulio Saggin)

Australians are likely to have to pay more for goods and services around Christmas, as falling company profits force businesses to raise prices.

The finding comes in a business expectations survey, by Dun & Bradstreet.

Dun and Bradstreet's Damien Karmelich says people need to prepare themselves for higher prices over the coming months.

"Sales and profit expectations are down. Expectations for employment growth are at their lowest levels since June of 1991, but selling price expectations are actually now at their highest levels since June 1988," he said.

"What that's telling us is that as businesses are expecting their sales and profits to drop, they're going to try and recoup some of that money by raising prices."

The survey also warns that high petrol prices will continue to hinder business profits because of the weakening Australian dollar.

Mr Karmelich says the recent global economic turmoil means Australians will continue to pay more for fuel.

"What we're finding is of course, is that the oil price has been declining, and that is having some positive benefits. But as the Aussie dollar has also declined, it's limited the amount of relief people are seeing at the bowser, both the consumers and businesses," he said.

Tags: business-economics-and-finance, economic-trends, oil-and-gas, retail, australia

Comments (49)

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• Pylon O'Toole:

  07 Oct 2008 8:24:16am

  Actually, I don't need to prepare for higher prices. I will just buy later. Simple really. Christmas is a morons delight, forget about it.

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  • Root:

    07 Oct 2008 8:34:27am

    Everybody should pay very close attention to the wisdom of Pylon O'Toole.
    
    Christmas is the annual rip-off - just like the 'Christmas 'sales' - and don't forget that all the commercial television stations, particularly the morning advertorial shows, willbe telling you 'the kiddies will love these...' and using that banal of banal expressions "....must have...".
    
    Go natural selection!

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  • Averald Blatt:

    07 Oct 2008 9:26:36am

    Yes, Pylon has expressed this perfectly - a moron's delight - but this is totally consistent with many other human traits.
    
    We (or some of us, anyway) spend stupid amounts on things we don't need at Christmas "because it's what everyone does". Look at the share market. Whether you buy or sell has nothing to do with the merits of owning a given share - the decision to buy or sell in a blind panic is simply based on doing what you think the other traders think you will do and will therefore do themselves.
    
    I know lots of people who vote the same each year regardless "because it's what they've always done".
    
    Those few of us who actually think about what we do and aren't governed by mindless habit, might - if we actually need something - pick up a really good bargain after Christmas, having not already undertaken a fevered, impulsive debt-funded spending spree on food we shouldn't eat and gifts no-one needs or wants.
    
    

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  • Ourcognitivesurplus:

    07 Oct 2008 10:11:45am

    Christmas certainly is a silly idea. Why do we want to celebrate the winter solstice when 1) we live on the wrong side of the world, and 2) the winter solstice means nothing to our modern climate-controlled life-style.
    
    Bugger the silly season. Forget the irrelevant traditions and use the holiday to have a good time. Hang out with your friends and family and have a beach BBQ. Forget lights and trees and roast meals and pudding and all the other stupidity.

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  • Pen Pal:

    07 Oct 2008 11:20:21am

    Isn't this talk all about the Government softening us up for higher prices when they said they would put downward pressure on such things as interest rates; petrol prices at the pump and food prices?
    
    Gee, we've been sucked in by experts - what chance do we have??

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• Eilleen:

  07 Oct 2008 8:26:49am

  I think its sad that the primary assumption is that Christmas is an occasion where it is mandatory to spend money and buy gifts. People *do* have a choice to not spend - it's just a matter of choosing not to bend to what has become a cultural pressure to spend.

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  • hmm:

    07 Oct 2008 8:49:27am

    I don't feel that there is a 'pressure' to spend.
    I AM a big spender at xmas, but by choice. My family is the same - but there is a mutual understanding that if things are tight, we'd rather spend on food and booze than on presents. That's just my family and what is possible for us. But I think the 'pressure to spend' is a bit of a myth - just like 'peer pressure' into illicit drugs - which kids are 'giving' those away! :P

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  • L:

    07 Oct 2008 9:02:24am

    Agreed, but I appreiate that it's a tough battle for those with kids (& motgage etc). The marketing is majority of the price of most objects, and it's ridiculously predatory.
    
    Sharing the brighter side of human nature is what it's all about. I'm just saying that there's a lot of competition from big corporations.

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• Andreu:

  07 Oct 2008 8:35:02am

  With the Oil prices falling below US$80, There seem to be nothing happening at our petrol pumps. still the same ridiculously high prices we're paying.
  
  Is anyone giving the oil companies the 'kick up the a***' yet?
  
  Prices should be closer to the $1 mark I believe. we need to put pressure on the banks to pass on the rate cuts but we also need to put pressure on the oil companies to pass on the lower price of petrol now before it's too late (for some)...
  
  

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  • Silverc2:

    07 Oct 2008 8:47:48am

    There is certainly a big impact on our falling AU Dollar as well which means we arent seeing the effect of falling oil prices.

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  • spin sick:

    07 Oct 2008 8:52:51am

    See here is the irony..... lower interest rates and a "flight to quality" during a crisis results in lower dollar and higher relative petrol prices. If we had higher interest rates the dollar would be higher and fuel costs lower

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  • Doh:

    07 Oct 2008 8:57:48am

    When you do the translation to Australian dollars, the peak oil price was around A$150. It has dropped as low as A$115 and is now in the low A$120 range.
    
    What that means for petrol prices is beyond me, but I'd say that if the A$ goes back to US50c petrol prices will go much higher rather than lower.

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• strewthmate:

  07 Oct 2008 8:42:18am

  ... "Rev. Billy and the Church of Stop Shopping" has it about right, lose the materialism and just be kinder to one another this Xmas.
  
  

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• Dave R:

  07 Oct 2008 8:48:27am

  Yep...buy now for Xmas because with the collapsing A$ the price of everything we import is going to skyrocket. And since we import nearly everything we are sunk.
  Times are changing fast.
  Dave R.

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• Mark:

  07 Oct 2008 8:59:15am

  Business owners are morons if they all choose to raise prices when economic times are difficult, unless they operate in an essential industry. Economics 101 says that if you increase your price demand will fall. Unless their is an acompaning rise in wages, the buyers will modify their spend distribution by buying less of non essential items. They have to understand the cyclical nature of the economy and save during the good times so that they can take the losses during the bad times. They should only rise prices in good times when the economy has the capacity to pay for those rises and demand exceeeds supply. Most non essential industry businesses will go to the wall within the next 12 months if they have not prepared their business for a downturn , even faster if they raise prices.

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  • thelonenut:

    07 Oct 2008 10:05:53am

    Raising prices of essential services when economic times are difficult , is not the act of a genius - it is the cat of an unethucal profiteer. Aren't there laws that prevent this sort of shameless brigandry?

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    • mosh:

      07 Oct 2008 10:34:59am

      I assume this comment will apply to unions demanding wage increases, landlords raising rents state government not lowering tax on business. What about the drop in the dollar, increase cost of interest rates, increased input costs.
      
      Raising prices is not always about profiteering, it is sometomes just about keeping the doors open and people employed.
      

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• Kieran:

  07 Oct 2008 8:59:50am

  If prices rise then I will simply not buy them. Shouldn't it be the other way around? When demand drops prices should fall. I think things in this country are expensive anyway compared to other western countries. As for the drop in oil prices - it really hasn't made a whole lot of difference to anything. Maybe Krushchev was right; "All shopkeepers are thieves."

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• Pravda:

  07 Oct 2008 9:01:49am

  Capitalism is much more creative. Wait for the "beat the price rise" sales in the next few weeks!

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• jmo:

  07 Oct 2008 9:06:22am

  This is news? Did anybody really expect anything other than a decrease in real disposable income given the current state of global economies?

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• stephen:

  07 Oct 2008 9:16:25am

  When all things US are finally made illegal as part of sanctions enacted after the invasion and destruction of Pakistan our coca-whatsit christmases will disappear altogether and bread will be a very reasonable $11.90 a loaf regardless...

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• john:

  07 Oct 2008 9:20:44am

  great argument - stop spending-- lower sales less staff
  you don't have to stop shopping just shop wisely or you will see unprecedented unemployment just think of the number of people employed in retail

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• dragon:

  07 Oct 2008 9:26:05am

  Cheer up all you grumpy bums !
  Christmas is for kids and when you have 3 of them, it's always expensive !
  Make them happy and suddenly you'll find on Christmas Day that the price of oil or a drop in the ASX really doesn't mean a hell of a lot :)

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  • thelonenut:

    07 Oct 2008 10:02:37am

    Very true, Dragon - but then again, the price of oil or a drop in the ASX doesn't faze me even now -
    
    Christmas is great - the genius of Christmas is a perent who has children who can be made to understand ( gently and lovingly) that expectations can be unrealissic. But not every child is a raving, salivating materialist, it's parents really who sometimes encourage and foster these atitudes of bigger and better ...
    
    Good luck to all with kiddies, and have a lovely Christmas - you can celebrate Christmas without buying into all the religious and crass commercial poo-bah...

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• lukemac:

  07 Oct 2008 9:27:57am

  With two and half months to go to Chirstmas, anything coming from overseas has been ordered and paid for by importers.
  I'd suggest that this happened before the arse fell out of the Aussie dollar so prices should rise until after Christmas when we will lose our jobs due to the credit crisis.

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  • GJ:

    07 Oct 2008 11:27:35am

    lukemac is not quite correct. Most importers operate with payment terms of 30 days ranging up to 60 days. If he AU$ dollar goes down in this interval they have make up the difference somehow. Of course getting credit like this may become more and more difficult as this crisis progresses. We will have to wait and see, cross our fingers, grit our teeth and hoope for the best.

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• GB Dorrington:

  07 Oct 2008 9:28:11am

  Well, well. A declining oil price has the benefit of allowing me to travel by car a little more now, with bikes attached, free of the fauning and posturing of the ever-bloated retail giants. I spent no more than $10 for each of 6 family members each Christmas. Remember it's the thought that counts, not the money! Enjoy.

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• Sinbad:

  07 Oct 2008 9:45:48am

  It sounds like France before the revolution.
  If the Aristocracy(Big Business) needs extra money for whatever reason, just give the peasants a squeeze.
  

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  • Peter O:

    07 Oct 2008 10:26:37am

    And we all know what happened to them.............

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• michael:

  07 Oct 2008 9:49:32am

  People spent insane amounts of money on rubbish every christmas.
  Think about christmas morning, most people know what santa brings anyway so whats the surprise of fun in that.
  if the kids do believe in santa it is easier. my daughter got a $15.00 present last year and loved it for weeks. which is pretty good as far as chrissy presents go.
  Try this. limit presents to $10 and buy people the silliest thing you can. snowshoes for grandpa !!!
  Keeps everyone laughing all day and you talk about it for weeks.

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  • tish:

    07 Oct 2008 11:26:20am

    Years ago, when our kids were small and cute, we spent the usual small fortune on 'creative' presents, which just got used to create weapons of various sorts.
    After lunch a friend came over with token gifts for the boys - $2 pressies from Crazy Clarks. A 'cowboy set' of guns and holster, and a sword and shield. Boy heaven!! Might as well have thrown away all the other stuff, including the things they had asked for so desperately.
    Cardboard boxes were always a big hit too - made into all sorts of exciting things over the years.
    Mind you, I'm not saying I learned a lesson from it - we still spend too much on 'things' to try to please people at Christmas.

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• Paula:

  07 Oct 2008 10:08:28am

  So businesses are going to put up prices at Christmas so they can rip me off to retain their profits? Its called Capitalism and Santa has always been the hand that feeds capitalistic greed. Lets get back to the real meaning of Christmas and our hearts and pockets will be much fuller this Christmas.

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• rob:

  07 Oct 2008 10:08:46am

  $10 limit is not a bad idea, but there are better ones.
  
  There are a number of charities around (like TEAR and OXFAM) who offer 3rd party Christmas gifts - buy a goat, a well or a toilet for a village in the 3rd world on behalf of your giftee.
  
  Everyone wins! And Christmas gifts can be meaningful once again.
  
  Merry Christmas

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  • watto_woman:

    07 Oct 2008 10:24:47am

    It's a sad fact of my life that my mother-in-law is so attached to excessive consumption that she won't even go along with the rest of us wanting to do the Secret Santa thing. So I actually did what rob suggests last Christmas...the looks on my in-laws faces when they opened the card and found out we'd donated to a third world country with the money for their gift.
    
    I smile thinking about it....they got the message that I wasn't going to participate in some game of mindless material consumption when we could get back to the real spirit of giving at Christmas. Sadly, though, by their reactions I think they believed they really did need "stuff" more than some of their fellow humans needed clean water. But, alas, they were unable to actually say so without looking like the greedy indulgent consumers they seem to be.
    
    So, this comes highly recommended....was tax-deductible too...wins all round!

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• Lindsay Cooper:

  07 Oct 2008 10:10:46am

  WHY?
  
  If the Australian economy is robust as we are told and we have nothing to fear from the finacial crisis in the USA then why the blo*dy h*ll is dollar in FREE FALL ????????
  
  Oil prices are dropping but not at my local pump.?????
  
  Does someone have an answers.??????/

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  • Peter O:

    07 Oct 2008 10:32:13am

    Greed, fear and stupidity, Lindsay
    
    

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  • dragon:

    07 Oct 2008 10:38:03am

    ".. Does someone have an answers.??????/ .."
    
    Yep ! ................... Hakuna Matata !
    Live a righteous life, respect others, find love and then give it to others.
    And you'll leave this mortal coil with a big grin on your face ........ Because at the end you won't care that petrol is $10.00 a litre, only that you have led a good life and have left a positive mark on the planet and your community :)

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  • Shaun:

    07 Oct 2008 10:59:22am

    Quite simply the Australian economy is anything but robust. We're massively in debt to foreigners that's constantly rising. We've got some of the highest property prices in the world - and that's a sign of speculation, not productive investment. And we've got a population that just doesn't get the concept of investing for the future in productive industry rather than blowing the lot on speculation and expensive cars. Flipping houses or taking holidays doesn't make the nation wealthy - never has and never will.

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• brentp:

  07 Oct 2008 10:28:18am

  Who writes these stupid things? Of course pricis will rise, the dollar is going down the gurgler so import costs rise enormously...some 20% in the past month alone. Nothing to do with company profits, they mark up a percentage on actual cost of goods. Recession will come here. I read where 40% of banks are financed from offshore funds which are no longer available! Hang on Oz for a bumpy ride.

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• Eric:

  07 Oct 2008 10:33:28am

  If we all stop spending at Christmas (or any other period) then businesses don't make any money anymore. And that means they don't need people to work for them... and that means that you have no job anymore.
  ... result: no job and no money for silly presents and also no money for food, fuel and mortgage..
  
  Conclusion: Just keep spending as much as possible.

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  • boris:

    07 Oct 2008 11:13:40am

    Maybe we need some other industries. Buy something Australian for Xmas. Prices of Australian made items wont be effected by the Aussie Dollar going down.

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  • Adam:

    07 Oct 2008 11:30:37am

    That's the kind of logic that got us into this 'mess.' Consumption spending does not make the economy grow. Savings and long term investment makes the economy grow.

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• ANTHONY:

  07 Oct 2008 10:34:36am

  I have no problems, no one in my family believe in father Xmas, it is not mid winter here, Jesus was born in November, so some say, and my families birthdays are more important to me than an ancient Jews.
  
  Merry Christmas!

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• granny:

  07 Oct 2008 10:41:32am

  Our Christmas present from the oil companies-maybe a 2c reduction, We are told that oil is become a scarce comodity. YEEET airports around the world are rapidly being upgraded and increased in size and capacity. Dubai is in a tourism building frenzy, Aeroplanes and cruise ships are getting bigger.
  All of the above mentioned rely on OIL in some form or another. The real reason for the misinformation doing the rounds is simple, the oil companie are funding the war in Iraq, in other words the troops are beind used for the corporaton greed and every $ that has been spent must be reimbursed via higher oil prices. Maybe for Chistmas I will fill up the tank of
  family members' cars.

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  • Shaun:

    07 Oct 2008 11:05:28am

    We've had 45 years of declining rates of oil discovery. There's certainly a lot of denial about that with all the new airports, big cars and so on but but ulitmately we'll have to face reality.
    
    Most independent (non-oil company) models suggest we're at or very close to the peak in oil production right now. And they've put that peak in the early years of this century for the past 50 years so the message has been pretty consistent.

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• Micko :

  07 Oct 2008 10:44:32am

  We all complain about the cost of living, stop spending outside your means, dump the credit cards and pay cash. You'll be suprised how good it feels and yes, there is life after credit debt!

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• Brian:

  07 Oct 2008 10:46:06am

  Interesting angle on the law of supply and demand from Dun & Bradstreet.
  Prices have been rising in recent years because supply has struggled to meet demand (in effect, businesses could tell price-cut customers to rack off and service those willing to pay the most).
  Now, demand is slackening and customers are in the box seat. Raising prices will only dampen demand further and drive customers to competitors.
  A business would have to be confident of its customer base to raise prices in this environment.
  I expect retailers will use Christmas as an opportunity to drive sales and they won't want high prices to keep people away.
  We'll see who is right - the highly paid analysts at D&B or this ordinary shchmo.

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• magoo:

  07 Oct 2008 10:59:26am

  For those who want a cheap festive season there are several options;
  
  One is to frequent the food-halls of charitable societies (Salvos have great Xmas dinners).
  
  Another is to shop in the week after Xmas, when the supermarkets are flogging remnant goods. Chrissie pud from last year will adorn my annual Xmas party again this year. If you want fresh meat before that, please bring your own road-kill as the canned dog-food has gone up in price, courtesy of our Kev. Brew you own beer for a cheap tipple. Distill your own whiskey for an (illegal) snort before Santa and Rudolf visit with all the cheap toys bought after last Xmas and stored in the gunyah.
  
  Wheee

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• Karen:

  07 Oct 2008 12:03:17pm

  Expensive Christmas???? Have just cleared my mailbox of the forest of junk mail to see an abundance of marked down clothes and toys and this is BEOFRE Christmas. We shop every Thursday night for our groceries and lately it is no man's land in the shops. Me thinks people already are voting with their feet and wallets. As for celebrating Christmas it really is a Christian celebation and yes I know about the pagan festival of winter solistice but look at the name CHRIST MAS. So really anyone who does not believe in the birth of Christ should still be at work and not celebrating anything.

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