Almost half of executives see inflation as positive, according to a new study released today by global consulting firm Kearney.
The study – which polled more than 350 U.S.-based CEOs, owners, partners, and C-level executives from companies with at least 500 employees across retail, healthcare, auto, tech, and banking – found that 48 percent of top leaders see perks in the current inflationary cycle, including opportunities for innovation and investment. Executives in the study also said that they expect the current inflationary cycle to end soon.
“While some degree of inflation is a necessary part of economic growth, as we’ve seen, not all inflation is positive, and the benefits it can yield are limited,” Greg Portell, lead partner of global markets at Kearney, said in a statement. “Having taken a negative course for some time now, what we’re now hearing from the executives we talked with is that the current inflationary cycle is more positive than negative.”
Kearney’s study also found that the core inflation triggers—including GDP growth (higher consumer spending), a historic level of government spending, opportunistic monetary policies, input costs (surging but slowing), and interconnected demand categories and supply chains—have shifted but continue to influence trends.
The executives in the study identified several positive inflationary outcomes, including renewed innovation cycles, a reset of stale categories, a shift from traditions, pricing flexibility, struggles with competitors, and investment opportunities. In the face of inflation, many are adopting a five-point “posture of defined optionality,” which includes streamlining portfolios and specs, fair and dynamic pricing, investing in innovation, bolstering supply availability, and rebalancing resources.
But across executives, not all inflationary sentiment is equal, the study found. Some expressed concern that lower- and middle-income communities feel the worst impact from inflation. However, the gap between CEO and VP views of inflation is shrinking, indicating that there’s more agreement about the economic pressures that businesses are facing.
“While our findings show that core inflation triggers have shifted, they continue to influence economic trends such as unpredictable GDP, an uncertain labor market, and supply chain whiplash,” Portell added. “Nonetheless, executives feel that the end is in sight. While they may be overly optimistic on timing, inflation seems to be evolving into more of a short-term than a long-term problem.”
This study comes as inflation continued to cool in March, signaling that the Federal Reserve’s interest rate hikes are having an impact.
Consumer prices rose 5 percent in March compared to last year, according to the latest Consumer Price Index released on last month by the U.S. Bureau of Labor Statistics. This marks the smallest 12-month increase since May 2021 and a slowdown from February’s 6 percent and January’s 6.4 percent year-over-year growth. Compared to February 2023, prices in March rose 0.1 percent.
Retail footwear prices similarly rose at a decelerating rate in March, up 0.3 percent from the same time last year. This marks the slowest growth in 24 months for the category. Prices for men’s footwear prices were down 2.3 percent in March, while women’s footwear prices rose 1.7 percent. Kids’ footwear also ticked up 2.2 percent last month.