Most cafes or restaurants have raised prices in some way, either by raising menu prices or increasing weekend or public holiday surcharges, said Wes Lambert, chief executive of the Australian Restaurant and Cafe Association. “Increasing prices can always affect demand, so that certainly is an unintended consequence that the RBA could not have predicted, because they believed that prices would only go up 0.1 per cent,” he said.

That assertion, though, has been lambasted by peak body representatives like Wes Lambert, chief executive of the Australian Restaurant & Cafe Association. “The government is bonkers if it thinks this won’t be inflationary,” he said. “The RBA has woefully underestimated the flow-through. It won’t disappear. It will be baked permanently into higher menu prices.

Australian Restaurant and Cafe Association explained that the average merchant fees businesses were expected to absorb were between 0.8 to 1 per cent. These fees used to be passed on to customers in the form of the surcharge, but will now be paid by merchants in some way, leaving them with two choices – either higher prices, or smaller profits. Mr Lambert said this “will be a shock to an industry that has margins between 2 and 3 per cent, potentially eating away at 40 per cent to 50 per cent of their profit margin”.