Demand for non-essential items, including tobacco has dropped dramatically, as a result of recent rate hikes and inflation, according to a small business owner in the Wollondilly Shire.

IGA Thirlmere Store Manager Carolyn Mepstead, said that sales have plummeted by $5,000 and tobacco sales have dropped $10,000 a week on average.

Audio: Carolyn Mepstead speaks about the drop in sales at her small business.

“Snacks, lollies, fizzy drinks, basically anything that is not a household essential has seen a drop in sales,” Ms Mepstead said.

She said consumers are struggling with the current cost of living and increased interest rates, and businesses are bearing the brunt of slowing spending habits.

Ms Mepstead said that this downturn in sales has been consistent since the interest rates started to rise, with another jump predicted from the RBA.

Her claims are reflected in recent data released in late May from the ABS, specifically for food retailing, with a decrease in sales being reported. In April 2023 sales were down 0.1 per cent ($20.9m) in seasonally adjusted terms.

Food retailing data from ABS, released 26/05/2023.

She said small businesses enjoyed increased sales during COVID-19, and that there was an expectation of a constant increase in sales after lockdowns.

“That’s just not happening. I think that’s where the misconception is coming from,” Ms Mepstead said.

“Everybody is going back to normal, everybody is out and about more.

“Regardless of the rate rise, we were going to lose sales based on the fact that people could leave their CBD, people can travel.”

Wollondilly resident Leah Marks, said she has had to adjust her spending and budgeting habits, particularly in the last six months.

“In regards to home loans, we are now paying substantially more than we used to. So that influences the amount of disposable money we have each month to spend,” she said.

“I used to try and support small businesses in the area more, but now that things are getting tighter I would probably be more inclined to purchase from whoever is the cheapest.”

Ms Mepstead said that she receives customer complaints daily, on the increasing cost of food.

“We are not being hit personally because we are considered a corner store or a smaller supermarket,” Ms Mepstead said.

“Food prices started going up mid-pandemic, and that was because they were having trouble getting stuff in from overseas, and if they could get them overseas, it was costing the company more,” she said.

And the pain is set to continue, with several banks posting plans for another rate rise later this month.