Prices may drop as businesses fight to shore up sales
MORE businesses are preparing to cut the price for their goods and services in coming months as the economy battles to recapture consistent growth, a new survey has found.
In efforts to shore up sales, business owners are becoming increasingly prepared to accept lower prices amid a weaker outlook for profits and employment.
Reflecting soft official inflation figures, global credit reporting giant Dun & Bradstreet’s latest Selling Price Expectations Index for the September quarter has dropped to 14.5 points, its lowest level since 2013.
Compared with three months ago, fewer surveyed businesses (24 per cent, down from 31 per cent) plan to increase their prices in the next three months, while more plan to cut prices (10 per cent, up from 8 per cent).
The findings formed part of D & B’s broader Business Expectations Survey, which showed that amid the weaker outlooks, business spending intentions had held up since the previous poll.
“Doubts about demand and the likelihood of increased spending in the economy continue to play out in our survey findings,” Dun & Bradstreet spokesman Adam Siddique said.
“Until we see some resilience in confidence levels, among both businesses and consumers, it’s likely that business expectations will continue to soften.”
The survey, which gathered the responses of 1200 businesses, also found that 57 per cent of businesses remained more optimistic about growing this year compared to 2014, although that figure was down from a high of 73 per cent in January.
One in four businesses counted weak demand as the main headwind to growth this year.