29 July 2022
ASB's latest Small-Medium Enterprise (SME) research shows business customers are feeling the pressure of record inflation on their businesses and supply chains but they're prepared to make changes to stay afloat.
Three quarters (76%) of businesses surveyed in July expect inflation to increase their operational expenses. A majority also expect increases to supplier costs and costs of goods will adversely impact them.
In response to this 42% of businesses surveyed intend to increase their prices and a further 21% are yet to make a call on price increases. The top three drivers for businesses looking to increase prices is the increase in operating expenses (69%), increasing cost of goods (65%) and increasing supplier costs (62%).
ASB Executive General Manager Business Banking, Tim Deane says business customers are keeping their options open in the face of extraordinary circumstances.
"With the annual inflation rate running hot at 7.3% along with the emergence from, and in many cases continued management of, Covid, businesses are staying flexible with how they price their goods and services in the face of the increasing burden on them from their own supply chain.
"What this means is that a café in Dunedin is now paying a lot more for power, coffee beans, milk and the freight to have them delivered on-site than they were 12 months ago. "So, rather than shouldering this entirely many intend to remain flexible and share the burden with their customers," said Mr Deane.
But in spite of the increasing costs and supply chain pressure, many businesses are also keeping their eye on other pressing issues such as the environment and sustainability."Around half of those surveyed tell us they have a plan in place to mitigate the environmental impact of their business. This is really encouraging given all of the other headwinds that Kiwi businesses are currently enduring.
"Of the businesses we spoke to 71% viewed sustainability as at least somewhat of a priority and 30% see this as a high priority, which tells us once these headwinds abate their focus could return to addressing this big societal challenge we all face," said Mr Deane.
ASB is committed to partnering with our business customers through this part of the cycle and beyond with initiatives such as interest only repayments on facilities where required, and support for businesses to tackle sustainability through affordable rural sustainability loans, low carbon asset finance and competitive rates for community projects such as KiwiBuild and social housing.
To find out more about ASB's Business Hub please visit: ASB Business Hub - Support to Jumpstart Your Business