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Home » Inflation hits five-year high but local businesses demonstrate fighting spirit

Inflation hits five-year high but local businesses demonstrate fighting spirit

  • marimac 

Statistics South Africa released its latest consumer price index with inflation recorded at 6.5% in May 2022, up from 5.9% in April 2022. Despite this, all but four out of the 27 industries monitored by Skynamo’s Industry Thermometer bounced back with positive growth within the same month. This resulted in May being the top performing month in 2022 thus far in terms of total order value.

Inflation always means consumers have less real money to purchase. Image credit: Sarah Chai | Pexels

Inflation always means consumers have less real money to purchase. Image credit: Sarah Chai | Pexels

Commenting on these results, Zane van Rooyen, product marketing manager at Skynamo says that they would have been even better if external factors were more favourable; “The continued war in Ukraine as well as the strict COVID-19 lockdowns still in place in China are both affecting world trade channels of vital food as well as fuel supplies.”

This is reflected by the first two months of 2022 starting with huge promise as Skynamo’s data showed vast improvements to order volumes across the board. “That, however, didn’t last long due to the ramifications of supply disruptions coupled with news of the war against Ukraine which resulted in cautious buying trends similar to those experienced during the pandemic. This uncertainty and risk of over-capitalising in an unknown market showed up across all industries with order values dropping while order numbers increased; a sure sign of cautious buying behaviours.”

“Call it resilience, call it learnings from COVID, or call it a will to overcome yet another global crisis, but May’s data shows a fighting spirit of upturned graphs and record order values,” says van Rooyen. “Skynamo customers seem to be using the data at hand and the extra time afforded from automating the sales processes to focus on making informed decisions that are clearly showing results. We salute the resilience of all our local small businesses and know that tapping into your entrepreneurial spirit will continue to yield positive results.”

In an inflationary environment, unevenly rising prices inevitably reduce the purchasing power of some consumers, and this erosion of real income is the single biggest cost of inflation. Inflation can also distort purchasing power over time for recipients and payers of fixed interest rates.

Generally in the supply chain, one of three scenarios occur. The first being that providers (based on economic forecasts) will absorb the additional costs temporarily until stability returns. The second involves a sharing of increased costs and the third being the most critical onto consumers when a full transfer of costs gets passed. This is currently the situation in South Africa given the several factors affecting the economy.