Inflation leaves less disposable income for businesses and individuals, and a looming recession leads to less spending comments Laurent Charpentier, CEO, Yooz.
Around one in five (22%) UK business owners said they weren’t confident they would survive a recession within the next 12 months, with 47% in fear of bankruptcy at some point in the near future.
To address this, many small business owners have the same reflex: raise prices. Raising prices then leads to an increase in inflation’s impact on the economy even more. Around half (49%) of businesses said they felt forced to raise prices due to the economic situation.
While this can be an essential strategy, it’s not a one-size-fits-all approach. Some businesses may be unable to increase prices because doing so could affect sales and negatively impact their bottom line. Instead, many business owners realize they need to focus on the bottom line instead of the top line.
However, what often happens in times of inflation is that we have to spend more to get the same product. Or we keep our spending reined in but get less product than we need due to the higher prices.
Read more at the International Accounting Bulletin here