Among the many concerns for global CEOs right now, inflation is topping the list. And according to many executives, these pressures are not going away any time soon.
Inflation was the second highest business concern reported among global CEOs behind COVID-19 disruptions, according to a survey of CEOs around the world highlighted in the C-Suite Outlook 2022 report from Conference Board, a business research group. Labor shortages, supply chain disruptions, and changes in consumer behavior also ranked among the top concerns for business leaders.
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According to a majority of CEOs, inflationary pressures will last at least through 2022, and perhaps beyond. 31% of global CEOs expect inflationary pressures to last well into 2023, with 35% expecting these pressures to last through the end of 2022. In the U.S., 24% believe these pressures will last through 2023.
Inflation has been a constant theme in the last year, with consumer prices rising sharply. In December, prices rose by 7% compared to a year ago, according to the Bureau of Labor Statistics’ monthly report. This number was up from the 6.8% growth in November and represented the highest inflation rate since the 12-month period ending in June 1982. It also marked the third consecutive month of inflation over 6%.
Online prices also grew 3.1% in December year-over-year, according to Adobe data. This marked the 19th straight month of online inflation, up 0.8% from November. Standout categories were grocery, where prices grew 4.9% year over year, and apparel, which grew 16.6% year over year.
Consumer impact aside, these rising costs are making it difficult for some businesses to handle their input costs to keep businesses functional. For example, 95% of CEOs in manufacturing said they are facing inflationary pressures on business needs such as raw materials and wages due to supply chain issues, labor shortages, and rising energy prices.
Given the concerns, CEO’s outlined the top issues that they will focus on in the coming year. These include digital transformation, improving cash flow and revamping business models. Attracting and retaining talent ranks as the number one internal issues that CEOs will focus on in 2022, especially as workers quit their jobs in droves as part of a “Great Resignation” sweeping all industries.
To address this issue, CEOs will need to offer higher starting wages, benefits, and worker-friendly policies such as a hybrid office situation, something that many retail companies have already kicked off. For example, Macy’s recently announced that it would boost its minimum pay to $15 per hour and launch a tuition benefit program for all U.S.-based salaried and hourly employees.
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