A CEO’s biggest headache right now? Inflation.
Last year, inflation, which measures the gap between prices and available goods or services, hardly registered for many CEOs, ranking No. 22 on their list of concerns. They were more preoccupied with supply chains stretched dangerously thin, rapid-fire changes in consumer behavior, the evolving Covid-19 pandemic, cybersecurity and recessionary risks, according to The Conference Board’s C-Suite Outlook 2022 report.
Now, the majority, or 59 percent, of CEOs in the U.S. worry that pricing pressures will persist through the middle of 2023 or beyond, versus 55 percent of their global peers, the report found.
What’s more, remote work is “here to stay,” largely in the U.S. A full 38 percent of U.S. CEOs and 41 percent of international chief executives expect a hybrid work model will increase productivity. On the other hand, 51 percent of U.S. and 46 percent of global CEOs believe the part-time-in-the-office model will weaken their corporate culture.
Retail companies have been on the front lines of rising prices as transport costs soared last year. On top of that, many retailers raised wages to recruit and retain workers. Some have managed all of these costs increases by successfully bumping up ticket prices.
Raising prices at Michael Kors has paid off, John Idol, CEO of parent company Capri, told investors in November. Marshalls owner TJX has publicly talked about how raising prices has helped to offset the amount of money required to keep its supply chain running.
Companies with pricing power are in a good position to protect their margins this year, according to Guggenheim Securities analysts Robert Drbul and Arian Razai.
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Retailers that can get away with charging consumers more money have the best chance of outrunning an inflation rate climbing at a pace not seen in decades, an S&P Global Market Intelligence survey found.
Separate from the S&P survey, 52 percent of U.S. businesses expect prices for their products to continue rising in 2022. Global supply chain disruption, rising commodity prices and labor shortage were the top three reasons why businesses said they believe prices will continue to increase.
And on Wednesday, the U.S. Bureau of Labor Statistics said that the Consumer Price Index (CPI) rose 7 percent for the 12 months through December. CPI rose at the fastest pace since June 1982. Core CPI, excluding food and energy, rose 5.5 percent over the same period, representing the largest yearly change since February 1991. Also showing increases were the energy index, up 29.3 percent year-over-year, and the food index, up 6.3 percent over the same period.
December’s retail apparel prices also rose over the prior month—with women’s apparel jumping 2.6 percent and men’s wear rising 1.4 percent—along with footwear prices increasing 1.5 percent and home goods, furnishings and supplies ticking up 1.3 percent.
Wells Fargo Securities economists on Friday said inflation will be a “bigger headwind for consumers than Covid in 2022.”