The cost of rent, petrol, restaurants and pubs are set to plummet when businesses re-open after the coronavirus shutdown.
Economic experts in Australia are confident the COVID-19 pandemic will drive the price of many items down.
But they warn other goods and services like healthcare, insurance premiums, electronic products, Ubers and taxis will surge.
Australia’s economy has taken a major hit since Prime Minister Scott Morrison gave the order on March 23 to close all non-essential businesses including pubs, bars, restaurants and gyms.
Brought in to slow the spread of the deadly coronavirus, the draconian restrictions have been a major success and helped Australia drastically reduce the rate of infection from over 30 percent per day to below five percent.
Now that Australia has flattened the curve so effectively the Prime Minister has flagged a ‘trial-type relief of restrictions’ which could be introduced as early as May 1.
When traders come back on line, bar-hoppers and restaurant diners may be able to snap up some bargains as businesses look to lure customers back with discounts.
Australia’s economy has taken a major hit since Prime Minister Scott Morrison gave the order to close all non-essential businesses including pubs, bars, restaurants and gyms to slow the spread of coronavirus
‘My suspicion is they’ll probably initially want to try and bring people back,’ Martin North, Principal economist of Digital Finance Analytics told Daily Mail Australia on Thursday.
‘So the last thing they’ll want to do is to put their prices up.’
But North said these rock-bottom prices won’t last forever.
‘I would expect them to start to move their prices higher after the initial two-for-one deals and 50-percent-off promotions, because they’ll need to recover their costs as many of them will have incurred a lot of additional costs for the last few months when they haven’t been able to trade,’ he said.
Renters can expect a huge drop in prices with some modelling pointing to a 20-30 percent decline in the real estate sector.
‘In the housing market, the bottom line is there will be a pullback by buyers and that will take momentum out of the market, and we could see some price falls,’ Nigel Strapledon, a real estate research fellow at the University of New South Wales’ business School said.
‘Yes, interest rates are lower but other assets, notably equities, are being hit.
‘So capacity for many people to use that wealth to buy into the housing market has been reduced.’
Consumers can also expect a win at the petrol pump with the average price of fuel approaching a 20-year low in Australia.
Thousands of Australians are planning to stop paying rent payments this month as they demand amnesty from the government during the coronavirus pandemic (man walks past Stop the Rent sign in Newton, Sydney)
CommSec senior economist Ryan Felsman expects average prices across Sydney, Melbourne and Brisbane to drop below $1 a litre within a week.
‘The collapse in demand due to the coronavirus is really impacting the prices for oil,’ he told Daily Mail Australia last week.
A spat between key crude oil suppliers Russia and Saudi Arabia has also boosted reserves, with flow-on effects for motorists the world over.
‘That agreement to limit supply, that collapsed about a month ago and really what we’re seeing at the moment is a price war,’ Mr Felsman said.
CommSec senior economist Ryan Felsman expects average prices across Sydney, Melbourne and Brisbane to drop below $1 a litre within a week
But it isn’t all good news for consumers according to the experts.
Although prices are falling, the cost of taxis and Ubers will jump.
‘A lot of people have just given up their taxis and parked them,’ Mr North said.
‘My suspicion is that there will be some businesses that will never come back.
‘So on the supply side, there will probably be a smaller fleet and that will put upward pressure on transportation costs for either Uber or taxis.’
The price of electronic items such as mobile phones, televisions and computers may also shoot up as the coronavirus crisis wreaks havoc on international supply chains.
Australia has dramatically reduced the rate of COVID-19 infection and Prime Minister Scott Morrison has flagged a ‘trial-type relief of restrictions’ which could be introduced as early as May 1
Similar supply and demand issues have also driven up food prices in supermarkets as shoppers look to stock up on non-perishable items like toilet paper and canned food.
But due to international border closures some export-driven foods such as seafood have seen a major drop off in prices, as a glut in supply floods the domestic market.
Mr North predicts some of the biggest price increases will come from private healthcare providers and the insurance sector.
‘The way they fund themselves is through the investments that they hold… and a lot of them will have taken a 30-percent hit on their investments,’ he said.
‘So my hypothesis would be that they probably will have to up their premiums.
‘I suspect that private sector health care costs will be significantly higher.’