Queensland Businesses Struggle with Rising Costs and Interest Rates

Rising costs and interest rates are forcing regional Queensland businesses to make tough decisions to stay afloat. The latest rate hike has pushed rates to their highest level since 2011, at 4.6 per cent, adding to the financial strain.

Nick and Amanda Kuhn, who run an organic egg business in Tiaro, say their family-run operation has been struggling to slow the "snowball effect" of rising costs. "There comes a point where you just can't keep wearing the cost because you're wearing so much but you can't keep charging more for your product," Mr Kuhn said. "It's a very fine balancing act."

A recent report found confidence in the economy was at its lowest level since the Global Financial Crisis, with 95 per cent of businesses feeling the impact of higher fuel prices. At least 60 per cent reported higher costs from freight, transport, and cashflow issues.

The Reserve Bank's rate hike has resulted in Mr Kuhn's mortgage repayments increasing by "roughly $1,000 a month". "It's harder to service loans. It's harder to get new loans if you want equipment or other things," he said.

Businesses have now been banned from adding a surcharge to card payments, which Mr Kuhn said helped cover expenses including petrol and wages. "It's going to cost us a couple of thousand dollars to wear that, it's less profit for the business," he said.

To recoup losses, Mr Kuhn plans to increase the price of egg cartons. Meanwhile, Christopher Hall, a Hervey Bay honey producer, has raised the price of his honey products for the first time in a decade. "In the previous 10 years we've just absorbed the increased costs because it's important to maintain honey as cheap as I possibly can," Mr Hall said. "We simply can't do that anymore."

Mr Hall's extra revenue will cover rising petrol prices and the growing cost of plastic containers, which is up by nearly 40 per cent this year.

Expert Advice

CQ University regional economics development professor John Rolfe said it could take up to 18 months for this week's interest rate hike to "wash through the system".

Professor Rolfe said businesses needed to make calculated spending decisions to ensure they can survive. "Be prepared to make an early call about cutting costs so they don't get caught out," he said.

However, Professor Rolfe warned that relief may not come soon. "Governments are under pressure to not spend as much to try and get inflation down," he said.

Despite the struggles, Mr Hall remains optimistic. "We have had to increase prices to stay afloat but small producers do make the world go round," he said.