The cost of doing business is rising fast across Australia

Dairy costs are up 67 per cent, insurance by 84 per cent and power is 18 per cent pricier. Then there’s that big award wage rise. This is the reality of running an ice cream shop in 2022.

The cost of running a Bathurst ice cream shop has soared by 23 per cent in a year, which experts say exemplifies the extraordinary financial pressure being heaped on businesses across the nation.

And there is no sign of a let-up, with big increases in power prices and wages on the way.

Such is the cost stress, Annie’s Old Fashioned Ice Cream Parlour co-owner Greg Murray said he believes the year ahead will be tougher for his Bathurst-based business than the pandemic was.

The price of cream has surged by 67 per cent in the past six months; insurance went up by even more. The price of fruit has shot up too.

Mr Murray employs 23 people — many on award wages which have just gone up by more than 5 per cent. The super guarantee has also been increased to 10.5 per cent, plus it now must be paid to casual workers earning less than $450 a month.

Annie’s Old Fashioned Ice Cream Parlour co-owner Greg Murray. Picture: Richard Dobson

On top of this, Mr Murray was recently informed his electricity bill would jump by 18 per cent. The business is a big user of power, so he is considering investing more than $20,000 in solar panels even though he only leases the shop.

He said he believed pay rises for award wage workers were “well deserved”.

“I can understand that employees have got to survive,” he said. “But it’s just more money we’ve got to find.”

That’s why he’s put up prices.

He was very thankful to have survived the pandemic, but said the period ahead was likely to prove even more challenging. “I think it’s going to be tougher because of the nature of our product — it’s a luxury,” Mr Murray said.

Retailers Association CEO Paul Zahra says there’s been no let-up for operators Picture: David Swift

Advocacy group Business NSW’s policy head David Harding predicted a difficult 18 months for many operators.

“Make no mistake, what you are seeing at this ice cream shop is a microcosm of what we are seeing everywhere,” Mr Harding said.

Against a backdrop of rapidly rising interest rates, he said supply chains would remain constrained, whether it be of ingredients, components or simply people, overlaid with global disruption caused by the war in Ukraine.

Beyond that, the energy transition will push prices up further before there are falls, Mr Harding said.

Mr Murray backs wage rises but says employers are under pressure. Picture: Richard Dobson

He expected operating margins to be squeezed for small and large businesses, but that would drive innovation in what is produced and how it is delivered.

Australian Retailers Association CEO Paul Zahra said there was a “lot of commentary about the rising cost of living, but the rising cost of business, in many cases, is more severe.

“Rents are rising, fuel and energy costs are increasing and supply chain logistics are more challenging, which all adds to the cost crunch,” Mr Zahra said.

“There’s been no let up to the business disruption since Covid hit, in fact things have only intensified.

“Many small businesses in particular are struggling to keep their heads above water.”

Originally published as The cost of doing business is rising fast across Australia