Australia’s annual inflation rate eased to 3.5% in July 2026, down from 3.8% in June. Underlying inflation, however, remained at 3.6%, suggesting that broader price pressures are taking longer to settle. The Reserve Bank also left the cash rate target unchanged at 4.35% in August, following three increases earlier this year.
What happens next is less certain. Betashares chief economist David Bassanese described the September RBA meeting as “live” following the latest inflation result, while Indeed economist Callam Pickering said he did not expect another increase this year. The differing views are a useful reminder that predicting the next rate move with confidence is difficult.
For businesses, the encouraging part is that not every response depends on inflation falling or interest rates coming down. While external conditions cannot always be controlled, there are still areas within your business where you can management can create more flexibility.
The RBA’s recent discussions with around 240 businesses, industry bodies and other organisations found that labour and other input costs remain elevated. At the same time, businesses are increasingly reporting that customer price sensitivity is limiting their ability to pass higher costs on, with some reporting modest pressure on margins.
Cost increases rarely arrive all at once. Supplier contracts, insurance, subscriptions, professional services and other overheads can gradually become more expensive without attracting much attention individually.
A periodic review can help identify what is still being used, what continues to deliver value and whether there are costs that could reasonably be reduced, renegotiated or removed.
The objective does not have to be aggressive cost-cutting. Sometimes it is simply about making sure the business is still spending money in the right places.
The structure that suited a business several years ago may not necessarily be the best fit today.
Some functions benefit from permanent internal capacity and strong organisational knowledge. Others may be better supported through a combination of internal staff, technology and external expertise. The right mix will depend on the type of work involved, how much continuity is required and how easily capacity needs to scale.
A useful comparison is not simply about cost, but about how each model supports the business operationally.
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The right model will vary from business to business. A permanent internal resource may still be the best fit in some areas, while other functions may benefit from a combination of internal capability, technology and external support. The key is finding a structure that gives your business the right balance of continuity, flexibility and expertise.
Reducing costs does not necessarily mean reducing resources.
Repeated data entry, manual follow-ups, duplicated approvals and unnecessary handovers all consume staff time. If these have gradually become part of the normal way of working, the cost may be easy to overlook.
Before adding another person or another system, it can be worthwhile looking at how the work currently moves through the business. A relatively small workflow change can sometimes release capacity that is already there.
Businesses also do not need to build their plans around one prediction of where interest rates or costs will go next.
Instead, forecasts can test a few reasonable scenarios: What if revenue remains relatively flat for six months? What if operating costs rise another few per cent? What if financing costs remain elevated?
Looking at these scenarios can provide better visibility over cash flow and help inform decisions around hiring, investment, pricing and other commitments.
For some businesses, it can also be useful to have an experienced financial professional involved in the process, not simply to prepare the numbers, but to interpret what they mean, challenge assumptions and help management assess different options before making a decision.
That might include comparing alternative scenarios, analysing the financial impact of a planned investment, reviewing margins or considering how much capacity the business has to absorb a change in costs or revenue.
The objective is not to predict exactly what happens next. It is to give decision-makers a clearer view of the possible outcomes and more confidence when deciding how to respond.
The latest inflation figures are not necessarily a reason for businesses to make dramatic changes. Headline inflation has eased, and there is still disagreement about where interest rates go from here.
But the current environment can be a useful prompt to review the things that are easier to influence.
There may be costs that no longer deliver enough value, resources that could be structured differently, processes that can be simplified or forecasts that could provide better visibility.
Businesses cannot control what the next inflation figure will be or what the RBA decides next. But you can continue improving how effectively your existing money, people and capacity are used.
Automation is often presented as the answer to inefficient business processes.
But technology does not automatically create a better process. If the underlying workflow is unclear, fragmented or unnecessarily manual, adding more technology can simply make the same problems move faster.
Australia is reshaping the R&D Tax Incentive, with future support set to focus more heavily on core experimental activities and less on supporting work.
For businesses already claiming R&D, the key question is whether projects are being clearly separated, documented and costed at the activity level.
See what the 2028 reforms could mean and what businesses can start improving now.
A new financial year should not begin with business as usual. It should begin with a clear new financial year business strategy.
Many businesses treat July as an administrative reset: close off the previous year, update payroll rates, prepare for BAS and move on. In the current economic environment, however, that approach is no longer enough.
