New Inflation Figures a 'Wakeup Call' as Illawarra Businesses Battle Rising Costs
Newly released inflation figures have confirmed what regional businesses in the Illawarra have been experiencing for months, according to industry advocates. The Consumer Price Index (CPI) rose by 3.8 per cent in the twelve months to December 2025, a statistic that Business Illawarra director Coralie McCarthy described as a "wakeup call for government."
Stubborn Inflation Hits Regional Businesses Hard
"Stubborn inflation, high interest rates and escalating business costs are hitting regional business harder and for longer, with little room left to absorb more pressure," Ms McCarthy said. She highlighted specific challenges facing local enterprises, including insurance premiums that have doubled or tripled, energy costs becoming unmanageable, and payroll tax and compliance costs directly eating into already thin margins.
This sentiment is echoed across various sectors in the Illawarra region, where business owners are implementing strategies to cope with the financial strain.
Accommodation Sector Feels the Pinch
Graeme Perry from Astra Apartments Wollongong reported significant increases across multiple areas of his business. "I was looking at our power bill for the last financial year, it had gone up 25 per cent," he explained. "We've just got an August one come through, that's gone up 15 per cent on kilowatt cost. There's a daily rate charge, which has gone up 11 per cent."
Mr Perry noted that rents have increased by seven per cent, making conditions quite tough. "You've just got to start doing things a bit smarter and work on your business development, or you'll fall by the wayside," he advised.
Looking ahead, Mr Perry expressed concern about the coming months from April to June. "The accommodation business dies in the arse, because the handbrake goes on," he said bluntly. "We struggle to survive come May and June, so it certainly hurts the business big time."
Manufacturing and Engineering Sector Under Pressure
The rising costs have also significantly impacted Peter Smith from Integrity Pumps and Engineering, which employs approximately thirty people. "18 months ago, costs were manageable, but since then we've seen a lot of rises in electricity costs, which hurts us fairly badly," Mr Smith revealed.
"We're a fairly large electricity user, we do have solar on the roofs of our business, but we still get pretty well with costs," he added, highlighting that even renewable energy solutions aren't fully mitigating the expense increases.
Wage pressures present another challenge for businesses like Integrity Pumps and Engineering. "The government are always on about wages for workers, and we totally agree," Mr Smith said. "But, just because a worker gets a pay rise, we can't automatically increase our cost to our customers, so we've got to cop a lot of that."
Despite these challenges, Mr Smith noted one positive development: "It's on the way up, which is what we need because we buy a lot of our stuff from overseas. From America and some from our friends in China, plus other places. So we're a fairly large importer of equipment, and the higher the dollar goes, the better off we are."
Calls for Government Action and Reform
Business NSW has called for the government to rein in spending, reduce red tape, and focus on productivity-enhancing reform. Business Illawarra strongly supports these recommendations, with Ms McCarthy emphasising that "reducing the cost of doing business must now be the priority."
"Small business is the backbone of the economy throughout our region's economy," she stated. "If inflation and costs remain unchecked, the risk is not just slower growth, it's the loss of businesses, jobs and essential services our communities rely on."
The combination of persistent inflation, escalating operational expenses, and regulatory burdens is creating a perfect storm for Illawarra businesses. As they navigate these challenging economic conditions, business owners are calling for targeted government intervention to support regional enterprises and prevent further erosion of the local economic foundation.
