Australians are spending less despite the worst impacts of the Middle East fuel crisis having passed, new data has revealed.
The Australian Chamber of Commerce and Industry’s second fuel supply crisis report found 55 per cent of businesses surveyed by business chambers across NSW, Victoria, South Australia, and Queensland reported weaker customer spending in April.
That is a rise from the 43 per cent of businesses reporting lower spending in March, despite a cut to the fuel excise coming into effect on April 1.
Of the more than 700 businesses surveyed across all four states between April 6-20, almost 30 per cent reported experiencing severe or significant impacts from fuel costs – down from 46 per cent in March.
However, a whopping 94 per cent of businesses still reported some sort of impact.
The chamber’s acting chief executive officer David Alexander said higher fuel prices and interest rates were “clearly weighing on consumer confidence, with households holding back on discretionary spending”.
Businesses were also being impacted by the crisis, according to the survey.
The number of businesses reporting they absorbed higher fuel costs rose from 61 per cent to 69 per cent in April.
Businesses delaying investment or expansion also rose from 31 per cent to 38 per cent, while more than 60 per cent had cut down on non-essential spending.
“The economic impact of global fuel supply disruptions is ongoing and will continue to weigh on Australian businesses for some time,” Mr Alexander said.
“This is a worrying signal. Businesses pulling back on investment will impact economic growth in the months and years ahead.”
The report came before US President Donald Trump on Saturday night announced an imminent peace deal with Iran, which include the opening of the Strait of Hormuz.
Closure by Iran of the strait, through which about a fifth of the world’s crude transits, had a significant impact on fuel prices in Asia and the Pacific, and sparked fears about continued supply, including of refined diesel and fertiliser.
The report called for continued policy support for businesses and to ensure temporary improvements in the fuel price translated into “sustained recovery in business conditions and broader economic activity”.
About 63 per cent of businesses said fuel costs had driven up transport and freight costs, while 43 per cent said it had caused cash flow pressures.
More than 60 per cent said they had reduce non-essential spending to cope with the crisis, and 36 per cent said they had passed costs onto customers.
