CFOs have relied on raising prices as their primary strategy for combating high levels of inflation, but they recognize that this strategy is unsustainable if inflation persists long-term, according to a survey by Gartner, Inc.
A May survey of 182 CFOs and senior finance leaders showed that CFOs will increasingly turn to cost reductions if above-average inflation continues into the fourth quarter of this year, while also seeking efficiency gains through increased automation.
“CFOs are receiving feedback from customers that the limit to price hikes is near,” said Alexander Bant, chief of research in the Gartner Finance practice. “This reality has already set the planning process in place for other strategies, most notably cost reductions and enhancing digital capabilities for increased use of automation.”
Fifty-four percent of respondents said that price hikes remain their top tool for now, but only 25% expected to continue to rely on price hikes if high inflation remained in Q4 of 2022. The trend was opposite for cost reductions, with just 20% of respondents currently favoring the strategy as their primary tool, rising to 39% if inflation persists (See Figure 1).