In France, inflation has risen sharply between 2021 and 2023, reaching levels not seen for 40 years. This phenomenon is prompting companies to think about how to adapt to its repercussions on production costs, the prices of goods and services, and consumer purchasing power. To achieve this, they are exploring different strategies aimed at mitigating these impacts while maintaining their competitiveness.
The main causes of inflation
Inflation is characterized by a general and sustained increase in prices, resulting in a loss of purchasing power.
It can be linked to several factors, including :
- rising demand (demand for goods and services growing faster than supply),
- rising production costs (rising raw material, energy and labor costs force producers to adjust prices to maintain margins),
- monetary policies.
Over the 2021-2023 period, the rise in inflation can be explained in part by :
- the disruption of global supply chains during post-pandemic recovery,
- rising energy and food prices following the Russian invasion of Ukraine,
- tensions on the labor market.
What are the implications for companies?
While inflation has a direct impact on individuals, it also has consequences for businesses.
Rising costs of raw materials, energy and services lead companies to pass them on to consumers. If prices rise rapidly, consumers may restrict their spending, particularly on non-essential products, which affects companies dependent on discretionary consumption.
Inflation also has an impact on planning, complicating financial and strategic forecasting. Professionals can find it difficult to manage their budgets and set long-term objectives. To optimize this management, many companies rely on an online pro account, which enables them to better organize their financial flows and track their transactions in detail.
Employees are under pressure to maintain their purchasing power. As a result, companies are forced to increase salaries, which adds to their operating costs.
Central banks often raise interest rates to counter inflation. This can have the effect of raising the cost of credit, thus slowing investment and increasing debt repayments for companies.
Adaptation strategies available to companies
Professionals have a number of solutions for dealing with inflation. First, they can revise their sales prices upwards, taking time to analyze their customers' ability to pay and competitors' pricing policies.
Another option: negotiate payment terms. If companies are unable to reduce purchase prices with their suppliers, they can renegotiate payment terms and sell part of their inventory before paying them. To persuade suppliers, it is advisable to emphasize the long-term relationship you have with them, and tooffer them something in return (an increase in order volume, for example).
Reducing production costs is another approach to consider.
This involves :
- increased team productivity,
- a reduction in production line malfunctions,
- limitation of "dormant" stock,
- the use of innovative technologies.
Companies have a number of levers at their disposal to cope with rising inflation, while complying with tax and social security regulations.