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Cost of living may soon ease as businesses turn local

·Personal Finance Editor
·2-min read
People cross a busy street in the Sydney CBD and Australian cash.
New research from CBA has revealed Aussie businesses are finding new ways to bring down costs. (Source: Getty)

Supply chains have been disrupted around the world, but Aussie businesses are turning local to try to keep costs down, according to new research from the Commonwealth Bank (CBA).

Almost one in four businesses are purchasing more from Australian companies to overcome supply chain problems rather than importing from overseas, the research found.

The research showed most businesses were maintaining a positive outlook regarding purchasing plans, notwithstanding the major challenges of continuing supply chain issues and rising costs.

CBA’s group executive, business banking, Mike Vacy-Lyle, said many businesses were turning to innovation and investment to protect themselves and grow.

“Despite difficult conditions, many businesses are planning to innovate and adapt to increase their revenue, and one in three anticipate growth in profits in the next 12 months,” Vacy-Lyle said.

He said the greatest disruption to supply chains had been experienced when purchasing passenger vehicles, with around half of businesses reporting delays.

“It would appear businesses are not waiting for supply chain issues to ease, but rather are adapting with new procurement processes and asset management,” he said.

“Many businesses are also extending the life of current equipment or sourcing cheaper products and brands not normally considered, to overcome supply chain problems.”

CBA said the production, retail, hospitality and distribution industries had been impacted the most by supply chain issues.

The construction industry was hit hardest by rising costs, with 86 per cent of respondents in that sector expecting increased costs over the coming year.

As a result, more than any other sector, businesses in construction had plans to introduce more efficient systems and processes and reduce or restructure their costs and debt, the research found.

Vacy-Lyle said demand for finance remained steady, with two in five businesses predicting an increase in finance needs over the next year.

“In an inflationary business environment, it is not surprising that reducing costs is a key focus,” he said.

”However, many businesses are adapting strategies to the changing operating landscape and investing in new vehicles, equipment and technologies to strengthen their businesses over the next 12 months.”

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