Two in five Australian businesses expect to increase the cost of their products more than usual, according to the Australian Bureau of Statistics (ABS), in a new batch of figures outlining the strong inflationary pressures on local businesses .
In its review of economic conditions and sentiment for May, released Thursday, the abs revealed that 38% of companies surveyed believe they will significantly increase prices over the next three months.
Of these, 92% of businesses said soaring prices for goods and services will force them to raise their own prices, and 78% circled the cost of fuel and energy as driving factors.
The results come as headline inflation sits at 5.1% across the board, reflecting the long tail of supply chain disruptions, the European conflict rocking the global oil market and extreme demand for household goods. consumption and construction services during the COVID-19 pandemic.
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Personnel costs remain a major concern, with 38% of companies expecting costs to rise saying they plan to pay their workers more over the next three months.
A relatively small 25% of companies said the cost of funding would drive price increases, suggesting that the recent hike in cash rates – the Reserve Bank of Australia’s first increase in 11 years – has not not yet had an overall impact on the sector.
But inflationary pressures are being felt on companies that don’t also expect increased costs.
Of the 48% of small businesses that expect their prices not to increase in the next three months, 46% said they need to retain customers.
And big news for the construction industry, 45% said they couldn’t raise prices because of their existing fixed price contracts.
The figure speaks to the intense pressure facing builders and others in the construction industry as they attempt to reconcile soaring material prices with contracts that may have been made years in advance. .
Only 23% of small businesses that did not expect cost increases said their revenue increased based on the cost of the business. In other words, nearly one in four expect to absorb the cost of inflation rather than pass it on to customers.