Businesses expect rising costs this year but remain optimistic: Metro Finance

While most businesses expect that the prices of goods and services will continue to rise in 2025, 66.4 per cent of respondents did not think their business would seek financing in 2025, according to a recent survey by Metro Finance.

Based on the survey, the two primary costs businesses are expecting for the year ahead are supplier costs (42.3 per cent) and human resources (39.9 per cent), including training and benefits programs.

“As we saw recently with the results of Metro’s 2025 consumer survey, there is a general sense of the market cautiousness, as businesses and their customers both take a hard look at their budgets, and make prudent decisions based on some uncertain market conditions,” David Albest, chief executive of Metro Finance, said.

Respondents’ primary business goals for the financial year of 2025 included increasing revenue (32.1 per cent), improving cash flow (29.7 per cent) and reducing debt (27 per cent), with 38.7 engaging in cost-cutting measures to improve net profit.

According to Metro Finance, this reflected business reactions to inflation, higher-than-usual interest rates and slower consumer spending that has plagued the economy over the past few years.

The business survey included the responses of 1,000 Australian employed and self-employed workers.

Almost half (42.3 per cent) of businesses believed that cash flow issues would be a key motivator for those seeking financing in 2025.

Sustainability initiatives were also a priority for many businesses, the survey found. Over a third (39.6) identified recycling as a sustainability initiative within their business, while 27.6 per cent used solar energy technology and 19.6 per cent used low or zero emissions vehicles to curb their environmental impact.

Businesses reported reputational benefits from their sustainability efforts, the survey found.

Over one-third (35.7) of respondents believed their business was well-respected by the community due to their sustainability initiatives, while 26.4 believed that customers view sustainable businesses as industry leaders and 19.9 reported greater business-to-business engagement due to sustainability efforts.

Sustainability-focused businesses also benefited from government grants. For example, Metro’s MetroEco green lending program was given a $50 million funding commitment from the federal Clean Energy Finance Corporation (CEFC), bringing the CEFC’s total commitment to $100 million.

Metro highlighted its commitment to sustainability through its green lending program MetroEco, which has seen over 4,000 electric vehicles hit the road since July 2024 and funded energy-efficient equipment and battery technology. It noted that this was made possible by competitive interest discounts for green assets.

Metro also noticed a proliferation of low and zero emissions vehicles provided to employees through salary packaging, leading to an uptick in demand for novated leases.

“Metro’s novated leasing offering is continuing to experience growth, with over 18,000 cars, of which 11,000 were low or zero-emission vehicles, being leased by employees through their employers in 2024,” David Hall, national novated manager at Metro, said.

A January 2025 consumer survey by Metro found that customers remain skeptical about electric vehicles (EVs), with 41.3 per cent having said they would not currently purchase an EV and 41.5 per cent having said they do not consider the mobility of EVs to be durable.

However, 66.2 per cent said they would consider a mild hybrid for their next vehicle, with 52.9 saying that concerns over petrol prices were a key motivator for purchasing a hybrid vehicle. One third (33.4 per cent) would consider a loan on an EV if the rate was cheaper.