Inflation has returned to sit within the RBA’s target band at the same time that SMEs are dealing with increasing cost pressures across the board.

In its Melbourne Cup Day meeting, the RBA abandoned plans to freeze the official cash rate until 2024 at the earliest and will adopt a more flexible timeline on when it lifts interest rates.

Judo Bank’s Chief Economic Advisor Warren Hogan says serious inflationary pressures have not been an issue for the last ten years and many Australian SMEs are wading into unchartered territory.

“It is going to be a challenge to manage that as inflation has been falling for a long time – decades, in fact,” he said.

“Businesses are going to have to pass on their costs to customers, for some businesses that’s going to be extremely challenging,”

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