Firms brace for deflation

IRISH firms expect prices to fall this year for the first time since WWII.

An international study has also found Irish privately held businesses (PHBs) are the most pessimistic in Europe and anticipate price deflation of 1.5% this year.

The results come from the Grant Thornton business report which surveyed more than 7,200 PHBs in 36 economies.

Irish PHBs are also anticipating a serious decline in turnover in 2009. 22% of Irish PHBs expect profits and turnover to rise this year while one in five anticipate a rise in selling prices. Against this, 40% expect turnover to decrease.

Patrick Burke, at Grant Thornton said: “It will come as no surprise that Irish PHBs are predicting a tough year. But the fact that they’re anticipating deflation is exceptionally serious.”