Key takeaways
- Inflation is easing, slowly: Prices across the economy rose 3.8% in the year to June 2026, down from 4.0% in May, but still above the Reserve Bank's 2 to 3% inflation target band.
- Interest rates stayed high: The official cash rate, the base rate that shapes what banks charge, sits at 4.35%, so borrowing costs more.
- Your costs are outrunning your prices: Wages, power and supplies are rising faster than what most businesses can charge customers. The difference comes straight out of profit.
- Customers are paying later: Late payments hit a six-year high in April 2026, so money you have earned takes longer to reach your account.
- What finance does: Spreading big purchases over time and unlocking cash from unpaid invoices keeps money in your business for the bills that cannot wait.
You have probably heard inflation is coming down. If your power bill, wage bill and supplier invoices say otherwise, you are not imagining it. The prices falling are mostly things like fuel. The prices rising are the ones your business pays every month.
What inflation did this year, in plain terms
Inflation is simply the speed at which prices are rising. The Australian Bureau of Statistics measures it through the Consumer Price Index, or CPI, a basket of everyday goods tracked month to month. In the year to June 2026, that basket got 3.8% more expensive, down from 4.0% in May. Underlying inflation, which ignores one-off price swings, held at 3.6%.
The detail matters more than the headline. Housing rose 6.8%, with electricity up 22.4% after government power rebates ended. Food rose 3.3%. Fuel fell 10.9% in June. The relief came at the bowser; the increases landed on bills that arrive whether you trade or not.
Why it still feels expensive to run a business
With inflation still above target, the Reserve Bank has held the cash rate at 4.35% after lifting it three times this year. The cash rate is the base interest rate for the economy: when it rises, your loan or overdraft rate usually follows.
Meanwhile NAB's latest survey found supply costs growing about three times faster than the prices businesses charge. You are paying more for everything but cannot lift prices at the same pace, because your customers are stretched too. The gap comes out of your profit.
| Cost | What happened in 2026 | What it means for you |
|---|---|---|
| Electricity | Up 22.4% over the year | A bigger fixed bill before you sell anything |
| Wages | Still rising, the top worry in business surveys | Payroll grows, and payday cannot be delayed |
| Supplies and stock | Rising faster than selling prices | Less profit on every job or sale |
| Borrowing | RBA cash rate held at 4.35% | Loans and overdrafts cost more |
| Your prices | Barely moving upward | Little room to pass costs on |
The bigger problem: money arriving late
Cash flow is the timing of money in and money out. A business can be profitable on paper and still fail because money out is due today and money in arrives next month. CreditorWatch, which tracks how businesses pay each other, reported late payments at their highest level since January 2020, with more invoices going past 60 days overdue.
The result shows up in the latest ASIC insolvency statistics: more than 14,000 companies went under in 2025-26. Most did not fail because nobody wanted what they sold. They simply ran out of cash while waiting to be paid.
A realistic scenario
Picture a busy Melbourne cafe with six staff. Wages keep climbing every quarter, and cleaning the floors after each shift eats almost an hour of paid time a day, a cost that lands on profit. A robotic floor cleaner could take over that job, but the $8,000 price tag was hard to find when rising costs were already squeezing cash at hand.
Paying cash outright meant dipping into the buffer that covers wages and rent in a slow week, right when margins were thin. Instead the owners used a working capital facility with EasyAsset, which works like a business overdraft: draw down what you need, repay over time, rather than paying $8,000 all at once. It kept cash free for everyday costs, while the robot got straight to work cutting the wage bill. Within months the savings outweighed the repayments, and the cafe was more profitable than before, without ever touching its buffer.
How finance protects your cash
Finance is not just for buying things you cannot afford. In a year like this, it is a timing tool:
- Equipment finance: Spreads the cost of a machine or fitout over the years it earns for you, so one purchase does not drain the account.
- Working capital finance: Working capital is the everyday money that keeps a business running. A working capital finance facility is a standing pool of funds you can draw on when a big bill lands before a big payment does.
- Invoice finance:Invoice finance turns unpaid invoices into cash now. Instead of waiting 30, 60 or 90 days for a customer to pay, you receive most of the money upfront. It is the most direct answer to slow payers.
- The right structure and rate: Loan types work differently for tax and repayments, and rates vary between lenders. A broker comparing more than 50 banks and specialist lenders finds the structure and rate that fit your business, without you doing the legwork.
Frequently asked questions
Should I wait for interest rates to fall before buying equipment?
Waiting costs money too. Major bank economists currently do not expect rate cuts until 2027, and equipment prices keep rising, so the same machine later usually costs more. The better question is whether it earns more than the finance costs.
Is paying cash cheaper than financing?
Financing does cost more upfront because of the interest. But cash spent on equipment is cash you no longer have for wages, rent or a slow-paying customer. Financing lets you make the upgrade now instead of waiting until you have saved enough, and waiting often means missing out on the very savings or growth the purchase would bring.
My customers keep paying late. What can I do right now?
Tighten payment terms for new customers, but that only helps future invoices. For invoices already unpaid, invoice finance pays you most of their value straight away, so cash arrives on your schedule, not your customer's.
What matters most
Inflation easing from 4.0% to 3.8% will not change how this year feels. Power and wages keep rising, rates are staying put, and customers are paying slower than a year ago. The businesses getting through are not the ones cutting hardest. They keep cash in the business: financing big purchases over time, keeping a facility ready for surprise bills, and getting paid for finished work without waiting months. Protect the cash first, and rising costs become a problem you manage.
This article is general information only, not financial, tax or legal advice. Consider your own situation or speak to a qualified adviser before making decisions.
Want to keep cash in your business while costs stay high? Compare cash flow finance options and get a free quote here.