The latest data from Xero Small Business Insights (XSBI) shows that, despite the fuel crisis that has persisted since March, small business sales have remained stable. However, this resilience is considered fragile, as pressure on profit margins and the broader economy is expected to intensify as the crisis continues.
The fuel crisis that began in March has led to a significant surge in prices, with gasoline costs rising by anywhere from 15% in the UK to over 43% in Australia. The increase in diesel prices has been even steeper, reaching 85% in New Zealand. Despite this, small business sales in the five countries studied by XSBI have actually increased. Australia recorded the highest growth in sales at 10.9% year-on-year, followed by New Zealand (5.5%), the UK (5.0%), the United States (3.6%), and Canada (1.0%).
While sales have risen, small business owners face major challenges. Higher fuel prices directly impact operational costs and diminish consumer purchasing power for non-fuel goods and services. Profit margins are coming under pressure, particularly in sectors heavily reliant on fuel, such as transportation and logistics.
There is growing concern that if these price surges persist, profit margins will face further strain, potentially limiting consumers’ ability to spend at small businesses. According to Consumer Price Index (CPI) data released by national statistical offices, the rise in the CPI during March was driven almost entirely by fuel prices, with no significant price increases observed in other sectors.
This challenge is further complicated for Australia and New Zealand, which import fuel from Asia via the Middle East. Although current fuel supplies are reported to be sufficient, there are concerns that any future restrictions on access could have a far more severe impact than the current price spikes.
Amidst this uncertainty, small business owners are advised to focus on aspects of their operations they can control—such as cash flow management and ensuring timely payments—while continuing to provide excellent customer service. While the global political landscape remains unpredictable, business owners can take steps to minimize the risks that may arise during a crisis.
Source: [Xero Small Business Insights](https://www.xero.com)
