Fresh data from Australia’s leading business industry body has highlighted a persistent downward trend in domestic consumer spending, even as the most severe disruptions from the Middle East fuel supply crisis have eased following a breakthrough diplomatic announcement. The Australian Chamber of Commerce and Industry’s latest bi-monthly analysis of fuel crisis impacts reveals that a growing share of businesses across four of Australia’s most populous states are reporting weaker customer demand, despite government interventions to lower fuel prices and a de-escalation of geopolitical tensions.
In the survey, which polled more than 700 businesses across New South Wales, Victoria, South Australia, and Queensland between April 6 and 20, 55% of participating firms recorded weaker customer spending in April. This marks a notable 12 percentage point increase from the 43% of businesses that reported lower spending in March, a shift that occurred even after a temporary cut to Australia’s federal fuel excise took effect on April 1.
While the share of businesses facing severe or major financial strain from elevated fuel costs dropped to 29% in April from 46% in March, an overwhelming 94% of respondents still reported experiencing at least some degree of negative impact from persistently high fuel prices. David Alexander, acting chief executive officer of the Australian Chamber of Commerce and Industry, noted that the combination of elevated fuel prices and successive interest rate increases has eroded household confidence, leading Australian consumers to pull back sharply on non-essential discretionary purchases.
The survey also laid bare the widespread strain the fuel crisis has placed on Australian business operations. The share of companies that have chosen to absorb higher fuel costs rather than pass all increases on to consumers rose from 61% in March to 69% in April. Meanwhile, the proportion of businesses delaying planned investment or expansion projects climbed to 38% from 31% in the prior month, and more than 60% of all surveyed firms have cut their own non-essential operational spending to offset rising costs.
Alexander warned that the economic fallout from global fuel supply disruptions is far from over, and will continue to drag on Australian business performance for the foreseeable future. “This is a worrying signal. Businesses pulling back on investment will impact economic growth in the months and years ahead,” he said.
The survey’s release came just ahead of a landmark announcement from former U.S. President Donald Trump on Saturday evening, who confirmed an impending peace agreement with Iran that includes the full reopening of the Strait of Hormuz. The strategic waterway, which carries roughly one-fifth of the world’s total crude oil shipments, was closed by Iran amid escalating tensions, triggering a sharp spike in global fuel prices that hit Asia-Pacific markets particularly hard. The closure also sparked widespread fears of prolonged supply shortages for key products including refined diesel and agricultural fertilizer.
The new report from the business chamber has called on Australian policymakers to maintain targeted support for affected businesses, to ensure that recent temporary drops in fuel prices translate into long-term improvement in business conditions and broader national economic activity. Additional findings from the survey show that 63% of businesses have seen transport and freight costs surge due to higher fuel prices, 43% have reported intensifying cash flow pressures, and 36% have ultimately passed at least part of their increased fuel costs through to end consumers.