Small businesses – particularly those that are heavily reliant on fuel – will feel the impact of last week’s interest rate rise, which will deepen the cost-of-living crisis, says CPA Australia.
The professional accounting body points to a “perfect storm” of rising costs and weakened resilience, citing a surge in fuel prices, stubborn inflation across essential goods and services, and weak consumer confidence.
Gavan Ord, business and investment lead at CPA Australia, said fuel-reliant businesses are already feeling the pain from the Middle East conflict, with transport, trades, logistics, agriculture and regional operators among the hardest hit.
“These businesses are feeling bruised by higher fuel costs that are flowing through every part of their operations,” he said.
“Fuel isn’t optional – it’s fundamental – and when prices spike, costs rise immediately with very little room to hide.
“For many small businesses, fuel is now one of their largest and most volatile expenses. Combined with higher interest rates and persistent inflation, it’s making an already difficult situation worse.”
Ord says the latest rate rise hits at a time when confidence across the economy is already low, with the increase adding more pressure, just as many small businesses were hoping for some relief.
“Borrowers who might have believed last month’s rate rise was a one-off will be deeply disappointed – at the same time as fuel, food and energy bills continue to climb.
“Every trip, delivery and service call now costs more. Businesses can’t absorb these increases indefinitely, and many are running out of options,” he warned.
“Many small businesses will be forced to pass on higher costs, while others will delay investment, reduce services or scale back employment.”
CPA Australia said the economic pressure highlights the urgent need for long-term reform to improve business sustainability, with short-term relief failing to fix a system that burdens small businesses with high costs, excessive red tape and uncertainty.
“What is needed is decisive action to cut unnecessary regulation, lift productivity and restore confidence,” added Ord.
Elsewhere, a new report from online lender Banjo Loans has revealed that over a third of respondents (38 percent) said inflation is the top issue that’s keeping them awake at night, with nearly half (46 percent) naming it as their biggest barrier to growth – up from 39 percent last year.
According to the SME Compass Report, the majority of the 1,000 respondents (67 percent) expect inflation to restrict growth over the next 12 months, while almost half (48 percent) say they have increased prices in the past year to stay afloat.
Cash flow is also proving to be a barrier to growth, according to 28 percent of SMEs, while nearly half (45 percent) have delayed growth opportunities over the past year due to cash worries.
A further 43 percent say they have cut expenses during the same period, while 39 percent say they are now more selective about customers and revenue streams.
Perhaps most concerning, half of all SMEs say they could run out of cash within six months if new revenue were to stop today.
“The Compass Report highlights that SMEs are balancing growth ambitions with survival strategies. Inflation is the dominant pressure, while cash flow concerns are intensifying, forcing businesses to prioritise viability over expansion,” said Banjo Loans chief executive Guy Callaghan.
“Across Australia, SMEs continue to grow and hit revenue targets, but cash reserves remain tight and uncertainty is high.
“The Compass data shows that SMEs are resilient but cautious, and need to carefully manage finances as they navigate business in 2026.”
