Why business conditions are challenging right now

Inflation is heading in the wrong direction, with a tight labour market putting upward pressure on wages and spending.
 
Prices rose at an annualised rate of 3.4% in December, January and February, before rising to 3.5% in March and 3.6% in April, according to the Australian Bureau of Statistics (see graph).
 
Unemployment remained very low during that period, rising marginally from 3.9% in December to 4.1% in April.
The latest data show wages growth is high, reaching 4.1% in the year to March, although retail sales are low, expanding only 1.3% in the year to April.
 
Collectively, this data highlights why business conditions are challenging right now.
 
Businesses are dealing with both low sales and rising prices. At the same time, with the labour market so tight, businesses are struggling to find staff and are being forced to pay higher wages.