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Supply chain disruption is still affecting nearly one in five Australian businesses, but the bigger pressure may be what has not yet shown up fully in consumer prices.
New research from Fishbowl Inventory, conducted by Primara Research using ABS Business Conditions data, found that 48% of businesses are absorbing costs entirely, while only 11% have raised prices so far. This means only about 20% of the total cost burden has reached consumers.
However, that buffer may be weakening as 18.6% of Australian businesses continue to experience supply chain disruptions, with the burden falling hardest on sectors closer to the start of the supply chain.
Agriculture recorded the highest level of disruption, with 42% of businesses still affected, more than double the national average. Retail trade also remained exposed, with 31% of businesses reporting supply chain disruptions.
Fuel and freight costs were the main pressures across primary industries, manufacturing, wholesale trade, retail trade, and accommodation and food services.
In agriculture, forestry and fishing, 94% of businesses reported an impact from fuel prices, while 85% reported an impact from freight or delivery costs. Manufacturing recorded the same level of fuel price exposure at 94%, while 78% reported freight or delivery cost impacts.
Accommodation and food services also reported high cost exposure, with 86% affected by fuel prices and 84% by freight or delivery costs. Retail trade followed at 86% for fuel prices and 73% for freight or delivery costs, while wholesale trade recorded 85% and 72%, respectively.
Electricity, gas, water and waste services recorded the highest fuel price impact in the chart at 97%, though freight and delivery cost exposure was lower at 66%.
"Agriculture and manufacturing are carrying a 90%-plus fuel cost burden and an 80%-plus freight burden simultaneously. Those costs have to land somewhere, and right now they are landing on business margins, not consumer prices,” said Peter Drennan, head of research and data at Primara Research.
The figures point to pressure building before goods reach consumers. Higher costs in agriculture, manufacturing and wholesale trade can flow through later to retailers, food service operators and other customer-facing businesses, depending on how long companies continue absorbing the burden.
Revenue data suggests that pressure is already being felt. Across all businesses, 36% reported a revenue decline over the past four weeks. The impact was sharper in wholesale trade, where 48% reported lower revenue, and accommodation and food services, where the share reached 53%.
The outlook among wholesalers also points to further pressure ahead. The research found that 53% of wholesale businesses expect revenue to fall again next month.
"Margins get compressed until they can't be. Fifty-three percent of wholesalers expecting a further revenue decline next month tells you the buffer is running out. Prices have to move,” Drennan said.
