With inflation on the rise businesses across all sectors are eager to know when we can expect it to ease and what else is on the horizon. While we don’t have a crystal ball, we do have the next best thing, insights from Adelaide Timbrell, Senior Economist and Forecaster at ANZ.
On a sunny Melbourne day, we were joined by Adelaide, along with our friends from The ToolsGroup and an illustrious group of execs from across the country. We discussed market conditions and spending predictions for the year ahead. If you couldn’t be there, take a look at the key takeaways from the day.
1. Businesses should prepare for a slowdown in consumer spending
According to Adelaide, spending per person will decline in the second half of 2023. Retail sales growth will slow as household discretionary incomes are redirected by interest payments and inflation. Adelaide said, “It’s going to take us a few years to get back to the level of buying power we had in 2021.” However due to the labor shortage, unemployment will remain low and wages will continue to increase, albeit not in line with this year’s inflation.
2. Consumer spending on services and small luxuries expected to stay strong.
Services spending, including dining, is expected to remain stable in 2023, with increased spending on travel. This accounts for some of the anticipated negative impact on the retail sector as consumers prioritize spending on experiences rather than expensive goods. However, there’s hope for certain CG sectors. They are predicted to perform well in line with the “lipstick effect”, where consumers choose to spend on more affordable luxuries in difficult financial times.
3. Businesses can protect and grow margins through pricing technology
We can’t control the economy but we can control how we respond to it. Rrading conditions are looking tougher than they have been for several years. Therefore, it’s important that businesses tackle the challenge head on with technology that will help make them more resilient. Pricing can be make-or-break for businesses during tough economic times. Especially during periods of high inflation and volatile overheads. But with the ability to see up-to-date margins across every product and make instant changes, businesses have the power to protect profitability. Whatever is happening around them.
For more insight into what’s happening across business in Australia and how to harness enterprise pricing powers through Flintfox, get in touch.