KPMG recently surveyed 300 CFOs and other financial executives to learn how their organizations are dealing with inflation. We asked about their plans for the weeks and months ahead, as well as their longer-term inflation-respons plans.
2022 KPMG Inflation Survey:
Key survey takeaways
How are companies adapting?
Supply chain and labor cost woes seemed inevitable at the beginning of 2022, but geopolitical risks—particularly Russia's invasion of Ukraine—changed everything. Those risks top the list of inlfation-related corporate concerns.
Unforseen geopolitical risks
Supply chain disruption
Increased cost of labor/wages
Difficulty predicting fluctuation
Increased cost of raw materials
Uncertainty related to long-term planning
With inflation reaching a 40-year apex, the Federal Reserve is expected to raise interest rates at the fastest pace since the 1980s. As real estate prices soar and businesses scramble for workers, organizations are exploring a wide range of operational actions to insulate the bottom line.
Develop new products at lower price points
Reduce number of employees
Modify existing products (e.g., reduced functionality or features)
Reduce number of products available
Operate in fewer markets
In the face of wage inflation companies are focused on the right structure, size and location of their workforce.
Reduce new hires
Outsource / offshore work
Reduce non-salary compensation components
Geographic redistribution of workforce
Employing strategy today
Planning to employ strategy in a year or more
Companies are looking to optimize their capital structures. Amid rising rates, companies clearly want to reduce their capital spending to service their debt.
Refinance existing debt
Raise capital via share issuance
Pay down debt ahead of schedule
Increase deployment of cash on hand for operational/strategic spending
Issue shorter-term debt
Read the survey