Regional Queensland businesses squeeze margins as rate hikes force pricing dilemma

Nick and Amanda Kuhn wake up each morning to tend their organic egg operation in Tiaro, a rural town 220 kilometres north of Brisbane, and each day the arithmetic of their business grows harder. The Reserve Bank lifted the cash rate for the fourth time in 2026 this week, pushing it to 4.6 percent—the highest level since 2011—and for the Kuhns, that translated into roughly $1,000 more per month on their home mortgage alone. They are not alone in feeling the squeeze. A recent survey by Business Chamber Queensland found that 95 percent of regional businesses were being hit by higher fuel prices, with at least 60 percent reporting significant increases in freight and transport costs, along with mounting cashflow problems. Confidence in the regional economy has fallen to its lowest point since the Global Financial Crisis.

The pressure forces an impossible choice: absorb the rising costs and watch profits shrink, or pass them along to customers and risk losing sales. "There comes a point where you just can't keep wearing the cost because you're wearing so much but you can't keep charging more for your product," Mr Kuhn said. "It's a very fine balancing act." The problem has only intensified because businesses are now banned from adding surcharges to card payments—a mechanism that had helped cover some of the climbing expenses. For the Kuhns, that ban alone will cost them a couple of thousand dollars a year in lost revenue. They have decided to raise the price of their egg cartons.

Christopher Hall, who produces raw honey in Hervey Bay, faces the same calculation. For the previous decade, he had absorbed rising costs to keep his product affordable, but he can no longer sustain that approach. He is considering raising the price of his honey buckets to $16 per kilogram. The cost of plastic containers alone has jumped nearly 40 percent this year, and petrol prices continue to climb. "We simply can't do that anymore," he said of his previous strategy. "We have had to increase prices to stay afloat but small producers do make the world go round."

John Rolfe, a regional economics development professor at CQ University, warns that the full impact of this week's rate rise will take up to 18 months to work through the system. He advises businesses to make early, calculated decisions about cutting costs so they are not caught off guard later. But he offers little comfort about timing: governments are under pressure to restrict their own spending in an effort to bring inflation down, which means no relief is coming soon. The regional economy faces a prolonged period of strain, with small operators like the Kuhns and Hall caught between the impossible choice of shrinking margins and rising customer prices—a squeeze that will test whether family businesses built over years can survive the next year and a half.