Many businesses were forced to lock in their discounts in April as wary consumers turned thrifty, a services industry survey suggests.
The Ai Group's Performance of Services Index released on Friday recorded a fourth straight month of contraction in the Australian services sector.
"The number of services businesses able to increase prices has fallen in recent months as competition from overseas sellers has increased, wages growth has slowed and consumer discretionary spending has tightened," the Ai Group report said.
The PSI, compiled from responses of about 200 companies, noted an acceleration in the slide in selling prices during the month to a record low.
"This latest fall in the selling price index has been sharper and faster than the period of growth seen in 2018; it may have wiped out any pricing gains realised in that time," the report said.
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"Sales, new orders and employment were all lower in April and many businesses discounted prices in tough market conditions," Ai Group chief executive Innes Willox said.
Retail trade activity contracted for a fifth month in a row to hit its weakest result since June 2012, according to the index, as selling prices in the sub-sector remained steady after decreasing in the previous month.
The index also recorded a contraction of activity in the transport and storage segment, adding that "some respondents reported slow inquiries and new orders while others said they needed to continue price discounting in order to sustain their sales levels in April".
Hospitality was the only services segment to expand activity last month, which Mr Willox attributed to "an unusual concentration of holidays" in April.
The PSI results appeared to back up ABS consumer price index figures released last week that indicated there had been no inflation in the first three months of the year.
