More than one in three UK firms (35 per cent) have neither increased nor planned to increase their prices in response to climbing costs and inflation rates, claims a recent new study.
According to the findings of a recent ‘Inflation Pricing Study’ by global consultancy Simon-Kucher & Partners, more than two-thirds of UK companies (70 per cent) do not know what to expect regarding cost increases in the coming year.
The study further adds that around half of UK companies surveyed (54 per cent) recognise the importance of price increases to counter the rising costs. However, the report found that many UK companies are hesitant to increase prices, fearing the loss of customers due to price increases.
The study revealed that approximately half of businesses (52 per cent) have a price increase or further price increase planned.
James Brown, a Managing Partner at Simon-Kucher, commented: “We see many businesses lacking the confidence to implement price increases. With many years of low inflation in most sectors in the UK, this is something new for most companies to have to deal with. This lack of effective price management experience and capability represents a real threat for businesses impacting their share price and investor confidence as well as their profitability.
“Failure to pass on costs – through headline increases or reducing promotions or discounting, risks significant margin erosion and their long-term viability.”
Philipp Biermann, Global Head of Business Services at Simon-Kucher, “Price increases are a very sensitive topic, especially for companies with long-standing customer relationships. Many of the current management teams will not have seen inflation at these levels, meaning companies need to quickly regain pricing expertise and muscle that has lain dormant in recent times.”
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