The inaugural AMP Bank GO Small Business Cost Pressure Index reveals small business costs have jumped almost 25% since Covid and look set to rise further.
AMP Bank GO Director John Arnott says the index was created to help Australians understand the pressure facing the businesses they rely on every day.
“Australia has more than 2.7 million actively trading small businesses – from cafes and salons to local retailers, sole traders and tradies,” he says.
“Behind the price of a coffee, haircut or call-out is a long list of costs most customers never see – wages, rent, power, fuel, insurance, tools, packaging and payment costs.
“We created this index to help consumers see those hidden pressures more clearly, at a time when households and small businesses are both under pressure.
“Small businesses are caught in the middle. Their own bills keep rising, but their customers are watching every dollar. Many have absorbed as much as they can, but there comes a point where those costs have to show up somewhere.”
The costs rising fastest
The AMP Bank GO Small Business Cost Pressure Index, modelled by AMP’s economists, measures the key costs faced by most small businesses to stay afloat. The costs have been weighted to reflect their overall significance.
Since March 2020, these costs have increased across the board, including insurance, which has risen by more than 50%.
- Insurance: up 52%
- Fuel: up 38%
- Interest costs: up 36%
- Electricity: up 26%
- Rent: up 23%
- Wages: up more than 20%
AMP Deputy Chief Economist Diana Mousina says many small businesses remain under pressure, even if headline inflation eases.
“While inflation has come down from its peak, many small business costs remain high,” she says.
“That creates a difficult balancing act, especially when margins are already tight and consumers are feeling their own inflationary pressure and are increasingly price sensitive.”
