This as they face increases in operational expenses, supplier costs, and costs of goods due to record inflation
Business customers are feeling the pressure of higher inflation on their businesses and supply chains, but they’re geared to make changes to stay afloat, a new ASB study has shown.
According to ASB’s latest Small-Medium Enterprise (SME) research, 76% of businesses expect inflation to lift their operational expenses. A majority also expect that they will be adversely impacted by increases to supplier costs and costs of goods.
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To address this, 42% of businesses said they plan to raise their prices, and a further 21% are yet to make a call on price increases. Increases in operating expenses (69%), cost of goods (65%), and supplier costs (62%) are the top three drivers for businesses looking to increase prices, the ASB survey found.
Tim Deane, ASB executive general manager business banking, said business customers are keeping their options open in the face of extraordinary circumstances.
“With the annual inflation rate running hot at 7.3% along with the emergence from, and in many cases continued management of COVID, businesses are staying flexible with how they price their goods and services in the face of the increasing burden on them from their own supply chain,” Deane said. “What this means is that a café in Dunedin is now paying a lot more for power, coffee beans, milk, and the freight to have them delivered on-site than they were 12 months ago. So, rather than shouldering this entirely, many intend to remain flexible and share the burden with their customers.”
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But in spite of the rising costs and supply chain pressure, many businesses are also watching out for other pressing issues such as the environment and sustainability.
“Around half of those surveyed tell us they have a plan in place to mitigate the environmental impact of their business,” Deane said. “This is really encouraging given all the other headwinds that Kiwi businesses are currently enduring. Of the businesses we spoke to, 71% viewed sustainability as at least somewhat of a priority and 30% see this as a high priority, which tells us once these headwinds abate their focus could return to addressing this big societal challenge we all face.”
