The Australian Retail Council (ARC) is calling for an urgent temporary reduction in diesel fuel excise, as new data shows rising fuel and supply chain costs are pushing retailers to cut jobs and reduce investment due to the rising threat to business profitability and viability.
While retailers welcome recent efforts by the Federal Government to secure fuel supply, new findings from ARC’s survey of retail businesses reveals cost pressures across fuel, freight, and supply chains are flowing directly into employment decisions and business sustainability. A temporary reduction in diesel fuel excise is viewed by the sector as critical to help reduce cost pressures on businesses.
ARC CEO Chris Rodwell said the data reflects the sector is facing a tough period ahead and highlights the seriousness of the cost crisis affecting Australia’s retail community and the wider economy.
“Retailers are being hit hard by the sharp increase in costs at the same time as consumer spending is constrained and business confidence is at a record low. The fact that businesses plan to adjust staffing levels and are warning about viability if conditions persist, shows the scale of the challenge ahead for a $444 billion sector that represents just under one-fifth of the economy,” he said. “The retail community welcomes recent efforts to secure fuel supply. However, further support is required and it’s clear that a temporary reduction in diesel fuel excise is an immediate, practical step the Government can take to ease pressure across supply chains and support jobs,” said Mr Rodwell.
“These options will help alleviate challenges faced by retailers and the broader economy and represent a much better alternative to other measures being considered that would only exacerbate the problem. Retailers are especially concerned with the prospect of, widespread, state-based work from home mandates as they would significantly disrupt how Australians shop and make it much more difficult for many retailers, especially small and medium-sized businesses, to survive,” said Mr Rodwell.
Jobs are already being affected
The survey shows supply chain and fuel cost pressures are now translating into employment impacts:
- Almost six in ten businesses (58 per cent) say current conditions are leading to staff reductions
- One in ten (11.1 per cent) report significant reductions in staffing levels
- No businesses reported increasing employment
Real risks to business viability
Retailers also warned of the consequences if current conditions continue:
- Four in five retail businesses (82.8 per cent) say a prolonged disruption would cause serious impact to profitability
- One in three (34.5 per cent) say it would threaten the viability of their business or force closure
- 7.8 per cent say they would need to close if conditions continue for several months
Costs rising across the sector
- Nine in ten retail businesses (90.6 per cent) report increased freight costs, with more than half facing increases above 10 per cent and nearly one in five above 25 per cent
- Two in three (67.2 per cent) say higher fuel costs are hitting them significantly or very significantly
Retailer absorbing costs but price impacts building
- More than half of retail businesses (55.6 per cent) are absorbing at least some cost increases
- One in four (24.8 per cent) say most or all costs will be passed on to customers
Outlook deteriorating
- 96.6 per cent expect conditions to worsen over the next 12 months
- More than half (50.4 per cent) say supply chain challenges are currently having a significant or critical impact
Call for practical support
- Almost four in five (79.3 per cent) support stronger action to secure global fuel supply
- More than three in four (76.1 per cent) support a temporary reduction in fuel excise on diesel
- Nearly three in four (72.6 per cent) support energy cost relief for businesses
- Six in ten (59.8 per cent) support broader tax relief
- Almost four in five (79.3 per cent) want government to invest more in supply chain resilience
The ARC online survey was conducted between 25 and 29 March 2026, with 169 national businesses participating. Small retailers made up more than 64 per cent of respondents.
Mr Rodwell said retail is a key bellwether for broader economic conditions, and the signs point to serious and immediate challenges to business viability.
“Retailers are telling us they are facing an uncertain outlook, while facing an immediate and significant increase in the cost of doing business. When you combine these two factors, it leaves many business owners with very little room left to move. Retail employs around 1.4 million Australians. Without action, rising costs will continue to flow into prices, job losses, and business closures, which will impact the broader economy,” he said.
“Retailers need practical support. Alongside immediate relief through measures like a temporary reduction in diesel fuel excise, there must be a stronger focus on reducing red tape, removing regulatory fragmentation, and cutting compliance costs across the economy to lift productivity and support business resilience,” said Mr Rodwell.
E media@retail.org.au P 0434 381 670