Australia’s NAB Business Confidence Index slumped to -29 in March 2026 from an upwardly revised 0 in February, marking the second-largest monthly decline on record and the weakest reading since April 2020. The sharp deterioration was driven by the fallout from the Iran war, which triggered a global oil shock and severely dampened sentiment.
Despite the collapse in confidence, overall business conditions were unchanged at 6. Within the components, sales eased slightly (11 vs 12), while profitability declined more noticeably (1 vs 4), underscoring mounting margin pressures as input costs jumped 3% q/q. Firms appear unable to fully pass through these higher costs: retail price inflation slowed to 0.5% from 0.9%, pointing to waning pricing power.
The Reserve Bank of Australia raised its policy rate for a second time in March, to 4.1%, partially unwinding last year’s easing cycle. With fuel prices surging amid heightened Middle East tensions, the central bank warned that headline inflation could rise to around 5% in Q2, further darkening an already challenging outlook for businesses.
