CEOs raise price of consumer goods to guard vs. economic shocks, survey says
Metro Manila (CNN Philippines, September 11) — More than two-thirds of the country’s CEOs are contemplating raising the price of their company products and services in the next 12 months, a study released on Monday showed.
The joint annual survey by the Management Association of the Philippines (MAP) and its partner PwC Philippines dubbed the “PwC MAP Philippine CEO Survey 2023” showed 26% of top execs polled are “highly exposed” to hiking prices to mitigate potential economic shocks and volatility, while an additional 42% are “slightly exposed”, or a combined 68% of the 157 CEOs surveyed.
The study covered both large and micro, small, and medium enterprises and ran from July until August when inflation accelerated at a faster pace of 5.3%, driven mainly by food, restaurants, accommodation, water, electricity, gas and fuels. July’s inflation reading was 4.7%.
“The range of price adjustments depends on the impact on their production cost. We cannot pass on everything to our consumers because it will make us uncompetitive. So in that case, they absorb a portion of the increased production cost. So it varies,” said PwC Philippines chairman Roderick Danao
“It's not just a matter of increasing price, you need to be competitive too. That’s the balancing act that the board has to do,” he added.
Of the 157 polled, 30% said their company already raised prices, while another 42% will follow suit in the next 12 months, especially during the Christmas holidays which traditionally whet consumer demand.
Food inflation alone accelerated to 8.2% last month from July’s 6.3%. Food has the biggest contribution, accounting for 53.2% of overall inflation.
PwC officials say CEOs who decided to hike prices were mainly from the real estate and car industries, but retailers also jacked up prices.
“Real estate increased prices by around 10%. In terms of automotive, around June, Toyota able to sell over 90,000 units," said PwC Deals and Corporate and Finance partner Trissy Rogacion.
"Retail clients increased prices but also gave discounts, so even if they increased, sometimes they have to take an opportunistic approach so margins may not be that high,” she said.
The survey also showed 54% have been cutting operating costs to cope with rising input costs.
PwC and MAP officials said the challenge is how to achieve better cost-efficiency so the price adjustments will be tempered. Among them would be investing in modern manufacturing facilities which would be cost-efficient over the long term.
“If you don’t shape up, you will lose the market so may sariling constraint dun [it has its own constraints], it’s not unlimited price increases because alternatives abound in the market for a replacement,” said MAP CEO conference committee chair Alma Rita.
