New report finds businesses expect to raise prices in the coming quarter

Australian companies are planning to raise their prices in the new financial year as they seek to hold onto profits while tackling cost pressures and low sales growth, a survey by business information firm Dun & Bradstreet has found.

The National Business Expectations Survey finds that more businesses plan to raise their prices compared with the previous quarter, with its selling price index rising to 7.6 points, up from 2.5 points.

“For some time now we’ve been hearing the phrase ‘discounting is the new norm’,” says Dun & Bradstreet chief executive Gareth Jones in a statement.

“These latest findings, while tentative and initial, suggest that businesses may now be ready to move out of that mode.”

The statement says that with an increase in prices planned, businesses have also raised their profit outlook for the quarter ahead.

It says as businesses struggle with high operational costs and sluggish sales activity, the move in the price and profit indices suggests businesses will target greater margins in response to a slow cashflow cycle.

Familiar issues to start-ups have been identified as issues holding businesses back across the board.

“Our research tells us that 46% of businesses identify operational costs as their biggest barrier to growth, and we know cash flow remains a major issue, so businesses may as consequence need to pursue more significant profit margins,” says Jones.

The survey also found both business spending and employment to be the key negative areas for the September quarter, with more businesses planning to scale back spending and reduce staff.

Despite ongoing coverage of the damage the high Australian dollar has done to manufacturers, exporters and retailers, the research found that the majority of businesses (58%) did not expect the fluctuations of the dollar to have any impact on their business in the next quarter.

The most optimistic industries were finance, real estate, insurance, transportation, communications and utilities sectors.

“The early effects on prices from the recent fall in the Australian dollar appear to be showing up with the rise in expected selling prices, although it must be emphasised that this increase is from a record low level and that any significant lift in inflation remains unlikely,” says Stephen Koukoulas, Economic Advisor to Dun & Bradstreet, in the statement.