iscover Latest interest rate rise ‘making a difficult situation worse’
BusinessConsumers warned to expect flow-on effects of continually rising fuel prices, with interest rate hikes putting pressure on an economy already lacking in confidence, according to one expert.
This week’s decision by the Reserve Bank of Australia to increase interest rates for the second consecutive time is only part of the problem for businesses and homes. According to CPA Australia, the corresponding effect on the cost-of-living crisis will increase pressure on homes and businesses, particularly those in fuel-reliant industries.
Higher fuel, goods, and services prices, and faltering consumer confidence are creating a perfect storm that, according to business and investment lead Gavan Ord, highlights the need for long-term reform.
“These businesses are feeling bruised by higher fuel costs that are flowing through every part of their operations,” he stated.
“Fuel isn’t optional - it’s fundamental - and when prices spike, costs rise immediately with very little room to hide.”
According to Ord, fuel, one of the largest and most volatile expenses, “adds fresh pressure just as many were hoping for some relief.”
Small businesses dependent on transport and mobility are especially vulnerable, he said.
“Businesses can't absorb these increases indefinitely, and many are running out of options.”
And with lower levels of confidence across the economy, Ord projects flow-on effects at the checkout.
“Many small businesses will be forced to pass on higher costs, while others delay investment, reduce services or scale back employment.”
In response, Ord called for reform that would target economic and business sustainability.
“Short-term relief won’t fix a system where small businesses are burdened by high-costs, excessive red tape and uncertainty. What is needed is decisive action to cut unnecessary regulation, lift productivity and restore confidence.”
Ord concluded with a message for businesses and households feeling the strain: “In conditions like this, early decisions can make a positive difference.”
“Accountants help businesses manage cash flow, plan for volatility and navigate heightened financial risk.”
Amelia is a Professional Services Journalist with Momentum Media, covering Lawyers Weekly, HR Leader, Accountants Daily and Accounting Times. She has a background in technical copy and arts and culture journalism, and enjoys screenwriting in her spare time.
