Inflation&Food Shortage…💫✨
THE WORLD BANK IS WARNING THAT THE GLOBAL ECONOMY MAY BE HEADED FOR YEARS OF WEAK GROWTH AND RISING PRICES
You don’t say? Buckle up.…
Surprise, surprise… didn’t see that coming…
The last time we had inflation of this magnitude was in the 1970s. That was fifty years ago.
In other words, there are very few entrepreneurs who have ever been confronted with inflation themselves. It's new to everyone.
Most entrepreneurs are mainly occupied with running their business and pay little attention to the macro-economic situation.
It ensures that many are lagging behind and do not respond adequately to this new environment.
They stare like rabbits into a light box and for a moment don't know what to do.
Should we raise prices? With how many? And if we raise prices, how many customers are we going to lose?
Rising prices are eating into profit margins, but the increases are only being passed on slowly.
Consumer prices, for example, rose by 8.33% in the past 12 months.
However, when we look at producer prices, say the prices that companies pass on to each other, we see an increase of ... 52.7%!
Look, when the prices companies pay rise by 52.7% and the prices they pass on to customers by just 8.33%, then you know that companies' profit margins are under enormous pressure.
My guess is that most companies are taking a wait and see approach at the moment and hope that prices will fall again as quickly as they have risen.
This is, of course, a situation that cannot be sustained for long. If prices do not fall, they will soon have no choice but to pass on the higher costs.
It's either that or go bankrupt.
Politicians and economists may be shouting that inflation will soon disappear on its own, but they ignore the fact that current producer prices are forcing companies to increase prices further.
And the central bank's efforts to cool inflation through monetary tightening are currently nothing more than a blow in the water.
We just have to look at oil and gas prices to realize that inflation isn't going to go away anytime soon…
Time will tell, own hard assets… 💯