Big Australian buyers are stuffing their warehouses now, anticipating more drops in the dollar.

With the Australian dollar dipping to its lowest low in years this week, many large retailers relying on overseas stock are buying-up big now, knowing things might get worse. Reports say import costs will rise about 5 per cent by Christmas, even if the dollar improves. Experts suggest retailers should choose whether to swallow higher prices and lose profits, or try to pass them on to customers and risk betting on good sales amid weak consumer confidence.

The CEO of Harvey Norman, Gerry Harvey, says his company is going with the latter option; buying-up now and banking on customers accepting higher prices, to be imposed from August 1.

Harvey Norman will bring in as much stock as warehouses can hold, the CEO says “we’re spending $200 million to beat the price rises... we’d buy more if we had somewhere to put it.”

Still, with retail sales growing less than expected in May amid the biggest slump in consumer confidence in 17 months, others doubt the willingness of Australians to dig deeper.

“The customer would not accept, and we would do our best to buffer, any price increases,” said Bernie Brookes, chief executive officer of Australia’s largest listed department store chain, Myer.

Economists say an impending rise in petrol prices will mean shoppers have less to spend on discretionary items, hindering retailer plans to charge more. Tim Hannon, chief investment officer of Evergreen Capital Partners says, “Prices should rise. The question is whether the environment allows them to pass that on... the Australian dollar is just another headwind for the retail sector in the short term.”