On Wednesday, the Australian Bureau of Statistics announced that the consumer price index (CPI), which measures the cost of major goods, had risen to a 6.1 percent year-on-year increase, the highest level in over 20 years.
ARA Chief Industry Affairs Officer Fleur Brown said that this painted a "grim outlook" for the national economy and the strain on individuals and businesses.
"Today's figures, whilst anticipated, deliver a jolt of grim reality for retailers. Households are under increased stress and businesses too, both large and small, are being severely challenged by rising operating costs," said Brown on Wednesday.
Consumer confidence, as measured by the ANZ-Roy Morgan Australian consumer confidence index, has already slumped by nearly 20 percent since March, an indication that people are tightening their spending amid current conditions.
Brown said while individuals will have to tighten their budget, the flow-on effects for small businesses will be the most severe.
"With employers battling operating cost increases associated with fuel, energy, supply chains and rents. It's an incredibly challenging environment for small businesses in particular, with many struggling with cash flow after navigating the pandemic pressures," she said.
She added that while inflation was creating pressure, Australia was still in a better position than other comparable countries.
"Whilst prices are inevitably increasing as business costs mount, we note that food and grocery CPI in Australia is tracking behind overseas."
The Reserve Bank of Australia (RBA) has raised the nation's interest rate for three consecutive months this year in a bid to curb inflation. Next week, the RBA will announce its next monthly move, with many analysts predicting another interest rate hike.
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