Many Companies Unable to Raise Prices to Match Inflation
Despite high inflationary prospects around the world, most executives don’t expect their companies to raise prices in the near term, a new survey from McKinsey finds.
Executives around the world feel stymied by current economic conditions: although most respondents face rising inflation, almost half don’t expect their companies to raise prices over the next six months, according to the latest McKinsey Global Survey.
Furthermore, a significant number of executives aren’t sure whether their companies will raise prices, suggesting that many find it difficult to project even near-term economic changes.
The survey highlights just how much expectations of inflation have escalated over the past six months as food and energy prices have continued to rise: almost three-quarters of the executives now expect higher inflation, up from 60 percent. To make matters worse, more than 70 percent say that input costs have already increased. A quarter say that these costs rose in a range from 11 to 20 percent over the past six months.
Despite all this, executives say that the prices their companies charge won’t keep pace with inflation. Just 37 percent of the respondents indicate that their companies raised prices in the past six months; 38 percent expect to be able to raise them over the next six. Only in the manufacturing sector—which suffered most from the rising cost of inputs—did a majority of the respondents say that their companies had raised prices and will continue to do so.
In China, however, nearly half of all respondents do expect their companies to raise prices—about a quarter of them by 11 to 20 percent.
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