Despite the encouraging signs of the inflation rate falling to 4.2 per cent in December 2023, the new year has not abated concerns for businesses who will be hoping the Government can bring the inflation rate ever closer to its target of two per cent.
Recent findings from the Zoho Digital Health Study found that high inflation was still a major worry for nearly 39 per cent of businesses in the UK, a concern that arises from a backdrop of rising costs and supply chain disruptions.
The study revealed that 68 per cent of businesses have reduced their technology investments this year, a direct consequence of the Bank of England’s (BOE’s) increasing interest rates.
However, despite this reduction, there is a clear trend towards investing in technology that yields substantial returns.
For example, 67 per cent of businesses are either actively using AI or planning substantial investments in this area.
This trend shows that technology is being used to improve efficiency and productivity, key factors in maintaining financial health during inflationary periods.
Strategies for businesses to tackle inflation
Technology is becoming a more and more reliable tool, especially Artificial Intelligence (AI). Such technology can streamline processes and reduce operational costs.
Innovation and technology go hand-in-hand, so businesses should constantly be on the lookout for the latest cutting edge technology that will keep them competitive.
To reduce risks associated with supply chain disruptions, businesses should explore diversifying their supply sources, giving them more options in case there is a sudden shortage from a particular source, offsetting any potential risks.
Even with tight budgets, investing in enhancing your customer and employee experiences can lead to long-term profitability and loyalty.
It is also important to balance competitive pricing with maintaining healthy profit margins.
With the next inflation rate announcement coming this month, businesses should remain vigilant and stay informed.
Focusing on strategic technology investments and operational adaptations will be crucial to thrive in these challenging times and lay a strong foundation for future growth.
For more information about how inflation rates affect your business and for guidance on implementing strategies to tackle it, please contact our team today.
