Joel Gibson of Zyft breaks down how every essential cost is rising at once and what the March CPI data means for small businesses whose customers are running out of breathing room.
What’s happening: Australia’s Consumer Price Index rose 4.6% in the 12 months to March 2026, the highest annual inflation reading since September 2023, according to the Australian Bureau of Statistics.
Why this matters: Consumer finance expert Joel Gibson says the average Australian household is now facing an additional $3,287 in annual costs compared to January, before the Middle East conflict escalated.
The headline inflation number from ABS data is 4.6%. It is the highest annual reading since September 2023, it is well above the RBA’s 2 to 3% target band, and it came in slightly below market forecasts of 4.8%.
Those are the numbers that will dominate the financial press today. But Joel Gibson, consumer finance expert at Zyft, says the number that actually matters to most Australians is not the CPI rate. It is what is left after the bills go out.
“The number that matters most to households today isn’t the 4.6% inflation rate,” Gibson says. “It’s what’s left in their bank accounts after mortgage or rent, groceries, fuel and bills go out, and that’s not a big number.”
What the data actually shows
The March CPI data from the ABS tells a story of pressure that is now concentrated in the essentials. Transport rose 8.9% over the year to March, driven by a 32.8% monthly surge in automotive fuel prices from February to March. ABS head of prices statistics Sue-Ellen Luke noted that the March fuel increase is the largest monthly rise since the series began in 2017, and that it pre-dates the halving of the fuel excise that took effect on 1 April. Average prices for regular unleaded petrol rose from 171 cents per litre in February to 228 cents per litre in March, a 33% increase in a single month.
Housing rose 6.5% over the year to March, the largest weighted contributor to annual inflation. Electricity costs are 25.4% higher than 12 months ago as Commonwealth and State government rebates that reduced household electricity costs are no longer in place. Food and non-alcoholic beverages rose 3.1% annually. Clothing rose 7.1%. Trimmed mean inflation, which strips out the most volatile price movements and gives a cleaner read on underlying pressure, held steady at 3.3% year on year, suggesting the core inflation trend has not accelerated even as the headline figure has jumped sharply.
The compounding crunch
Gibson frames what is happening not as a single shock but as a compounding series of hits arriving simultaneously. “There isn’t one thing driving this, but rather everything hitting at once,” he says. The end of the $300 government energy rebate in January lifted electricity bills. Two RBA rate rises in February and March added around $1,800 a year to the average home loan. The Middle East conflict pushed fuel bills up by as much as $800 a year for a typical family. Health insurance increased by $220 in April. And the three major telcos are hiking mobile plans by $50 to $60.
The grocery picture adds its own layer. Gibson points to Zyft data showing Abbott’s bread rose an average of 4.5% across Coles and Woolworths from August 2025 to date. Australians were spending $178 per week on groceries in mid-2025, according to Canstar Blue. Since then, groceries alone have added an extra $5.52 per week, translating to at least $287 more over the coming year on the same items. “It’s not the discretionary stuff doing the damage,” Gibson says. “Zyft data clearly shows the basics have crept up. The kicker is, you can’t opt out of any of it. When the basics go up, the checkout total just keeps climbing.”
Combined, Gibson calculates the average Australian household is now facing an additional $3,287 in annual costs compared to where things stood in January, before the Iranian conflict escalated fuel and supply chain pressures. “Rewind to January, ahead of the Iranian conflict, when we calculated this at $2,192,” he says, “showcasing how quickly often unexpected pressures can stack up.”
What customers can no longer absorb
For SME owners, particularly those in consumer-facing sectors, the implications of the cost crunch are direct. When households are absorbing an extra $3,287 in unavoidable costs annually, the discretionary budget shrinks accordingly. The spending that gets cut first is not groceries or fuel. It is the meals out, the clothing purchases, the home improvements, the services that feel optional even when they are not strictly so.
The data from this session paints a consistent picture. Consumer sentiment fell sharply in April, with the unemployment expectations index jumping nearly 10% according to the Westpac-Melbourne Institute Consumer Sentiment Index. The Equifax Consumer Market Pulse for March showed Australians retreating to their existing banking relationships rather than seeking new ones, a behaviour consistent with financial caution rather than confidence. Credit card demand among 18 to 25-year-olds is rising as younger consumers lean on traditional credit products rather than discretionary spending.
For SMEs, this means the customers coming through the door in the June quarter will be making more careful decisions about where their money goes. Businesses that offer clear value, flexibility on payment, or products tied to unavoidable household needs are better positioned than those relying on discretionary spending momentum that is visibly fading.
What comes next
Gibson is cautious about near-term relief. “With the cost pressures showing no signs of easing, especially in services and everyday essentials, the RBA will likely be left with little choice but to keep rates higher for longer, further compounding pressure on already struggling Aussies,” he says.
There are some partial offsets on the horizon. Tax cuts arrive in July. The government’s crackdown on card surcharges takes effect in October, which will provide some relief at the point of sale for both consumers and businesses absorbing those fees. The fuel excise halving that took effect on 1 April should take some of the edge off March’s 32.8% fuel spike when April data is published. And the May Federal Budget, which lands next week, will be watched closely for any additional cost of living measures.
“The May Budget will come at a pivotal time for those seeking financial reprieve in a time of unprecedented need,” Gibson says, “and it can’t come soon enough.”
For SME owners, the practical read on today’s data is straightforward. Your customers are under sustained and compounding financial pressure. The June quarter is going to require careful attention to pricing, value positioning, and payment flexibility. And the businesses that understand what their customers are carrying right now, not just what they want to buy, will be the ones best placed to navigate what comes next.
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