Falling dollar won't hit dirt cheap prices - yet

UPDATE: Dollar drops below parity but TVs and overseas holidays are likely to stay dirt cheap - for a while at least.

Dollar

THE once-mighty Aussie dollar is losing purchasing power as it slips below its US counterpart but TVs and electrical gadgets are likely to stay dirt cheap - for a while at least.

Overseas holidays are safe for a little while, too - unless you're travelling to the US.

The Australian dollar fell briefly below parity with the greenback, dropping to its lowest point of the year at 99.96 US cents around lunchtime.

It rebounded during the afternoon but currency trader Tony Darvall, of Easy Forex, says the dollar should fall to 98 US cents by the end of May.

At 5pm (AEST), the dollar was trading at 100.08 US cents, down from 100.27 cents on Friday.

The dollar fell below parity again in late afternoon trade after European markets opened at 5pm (AEST).

Harvey Norman chairman Gerry Harvey was unconcerned about the weakening Aussie dollar, saying it "probably won't make any difference" to prices of imports.

This is despite the retailer naming the high Australian dollar as a factor in falling profits in its March quarter results.

"I don't think prices will go up," Mr Harvey said.

"The bloke who's making it, wherever he's making it, I think they are bearing the brunt (of a weaker Australian dollar)."

Mr Harvey said he expected prices for imported electrical goods to continue dropping because consumer demand remained low.

Flight Centre spokesman Haydn Long said prices of overseas hotels and holidays would not suffer immediately under a lower dollar.

Suppliers tended to sign contracts for package deals for up to a year ahead.

"It's really only relevant if you are going to the United States," Mr Long said.

Travellers also have the benefit of lower airfare prices to offset any currency falls.

"A return ticket to Los Angeles five years ago was $1560 and now it's $1080," he said.

Even for travellers to the US, it was more likely that a lower Australian dollar would result in cheaper hotels or shorter stays rather than a complete cancellation, Mr Long said.