Australia: Buy now because you won't be able to afford it soon

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Buy now because you won't be able to afford it soon

By Michael Cave

Got your eye on a nice car? Found yourself trying on imported suits recently? Thinking of investing in a few cases of the latest release Chateau Neuf du Pape?

Here's a tip: stop thinking and start buying.

Although the Australian dollar bounced back from a record low of US51.5" during the week, every day it heads below US60", the likelihood of price increases for imported products goes up exponentially.

Cars, clothes, shoes, sporting goods, electronics, jewellery ... you name it, the price is likely to be heading up by Christmas.

And those price increases won't be restricted to goods manufactured in the US.

They will also affect goods from countries with currencies linked to the US dollar, with parts sourced in the US, or where parts or freight are traded in US dollars.

The chairman of economists at Ibis Business Information, Mr Phil Ruthven, said: "Overall, about 15 to 18 per cent of all retail products in Australia are likely to be affected.

"But even within that figure, some of the pain is going to be absorbed by the offshore supplier: it is better to take a short-term loss than put yourself out of business."

The automotive sector, which represents about 36 per cent of Australian retail, is going to be the most affected: price rises are likely to hit new cars, fuel and the cost of replacement parts.

"Between now and year's end, we could see a 1.5 to 3.5 per cent increase in new car prices," said Mr Tony Robinson, managing director of the automotive industry bible Glass's Guide.

On an average car that could translate to $900-$1,200 but on luxury cars it is likely to be more. But the changes could be of marginal benefit for the value of cars in the second-hand market.

Exclusive men's clothing retailer Henry Buck is feeling the squeeze across its range of imported suits, shirts and ties.

The managing director of the 110- year-old private retailer, Mr Tim Cecil, said 2000 had been "a very, very difficult year", with sales figures over the past three months dramatically affected by the GST, the Olympic Games and corporate clientele concern about unsettled financial markets. About 20 per cent of the Henry Buck range has direct exposure to the US dollar, while the rest has indirect exposure through US dollar pricing on fabrics or other components.

The news on imported alcohol is not quite so bleak.

The dollar had not fallen markedly against the franc, so French wine prices were not likely to change in the short term, said Mr Tony Leon, managing director of Woolworths' specialist wine retailer, Dan Murphy.

"We have been paying our French suppliers roughly the same rate we were getting 12 months ago and absorbed the small difference in an effort to keep the prices the same between now and Christmas," Mr Leon said, but he added that the retailer would review the situation in January.

http://7am.com/cgi-bin/wireclicker.cgi?http://www.afr.com.au/news/20001021/A63600-2000Oct20.html

-- Carl Jenkins (Somewherepress@aol.com), October 20, 2000


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