Rapidly increasing Inflation rates have been continuously plaguing the nation for months on end. The rising rates have largely been fueled by pandemic-induced supply constraints and production issues combined with surging consumer demand. Some businesses have even begun to buckle under the massive strains imposed by the constantly inflating prices. Unfortunately, according to CNN, a light at the end of the tunnel still has yet to be seen as many experts warn that inflation isn’t going to slow down anytime soon.
Predictions that inflation rates will continue to spike in the foreseeable future came out of a survey issued by the Conference Board that cited 55% of CEOs globally firmly believe that inflation will continue to be an issue well into 2023. Their predictions come amid reports that confirm that inflation rates have preceded to top nearly 40-year-old records. The latest December inflation statistics reveal that consumer prices shot up by a mind-boggling 7%.
Inflation is affecting corporations just as much as it is consumers. Businesses are having to pay more for both wholesale products and raw materials, which hurts their bottom line as well as drives prices up for their customers. This is only being further exacerbated by sustaining supply chain shortages and an utter lack of workers. The increasing prices businesses are facing from their suppliers could put many between a rock and a hard place.
An inquiry done in the latter half of 2021 by the Wall Street Journal revealed that a large majority of CEOs are genuinely worried for their companies. Many CEOs specifically expressed that they are worried that their businesses could not “absorb price increases.” The Conference Board echoed the Wall Street Journal’s findings and stated that nearly half of all CEOs that they surveyed were ill-prepared to handle the current inflation crisis.
Their concerns are warranted, especially because many companies operate on minimal profit margins. Despite wholesale prices remaining generally stable in November and December, it doesn’t mean that there won’t be a surge following a post-holiday demand low. In fact, overall, the prices that companies paid their suppliers in 2021 were 9.7% higher than the year prior.
The heightened inflation figures especially don’t bode well for small businesses. Many small businesses have already endured immense revenue losses due to pandemic-induced business shutdowns and labor shortages. Those smaller businesses simply do not have the extra capital to swallow those nearly 10% inflation-related price hikes. Additionally, Unlike corporate giants like Amazon, many small businesses don’t generate enough excess wealth to offer attractive incentives to their employees, making turning a profit amid soaring prices an even more difficult thing to navigate successfully.
Inflation has undoubtedly sunk its pricy claws into every sector of industry imaginable. And the fact that it is only further being fueled by persisting mitigating circumstances is exceedingly concerning not only for the average consumer’s checkbook but also for corporate entities ill-prepared to tackle this continuing inflation curveball. The latter half of 2023 could bring relief, however, it ultimately remains to be seen who will be left standing after the dust finally settles.