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Winning during inflation

December 13, 2022

“Brands must allay any risk consumers feel about shopping and buying.”

With concerns rising about the economy in general and inflation more specifically, how should brands respond?

Over the past two decades, almost no advanced economies have experienced inflation above 5 percent, and for some, like the U.S., it’s been four decades. Only about half of emerging markets have experienced inflation that high. But during 2021, the percentage jumped to 40-plus and 70-plus percent, respectively. As Reinhart and von Luckner wrote, “the most salient feature of today’s inflation is its ubiquity”.

Since the 1980s, central banks have been laser focused on inflation. But the pandemic changed everything. Governments stepped in with generous support for households and businesses and interest rates were kept low to ensure the flow of credit. The net effect sustained consumer spending. With service industries all but inoperative, spending shifted goods like durables, home goods and technologies. But manufacturing and logistical difficulties have tied supply chains in knots, leading to high demand and low supply, thereby sparking a significant run-up in prices that has yet to ease off. The constriction of food and energy due to the war in Ukraine has added even more upward pressure on prices. And higher interest rates have made global financial markets brittle. For the foreseeable future, inflation will a challenge for brands.

Consumer reactions have varied widely. Kantar’s 19-market Global Issues Barometer (representing 68% of global GDP) found across three waves in

2022 (with another coming soon) that top-of-mind concerns about the economy in general and inflation more specifically are rising worldwide.

In the most recent wave, 47% expressed concern about the economy and 31 percent mentioned inflation.

Read more: https://bit.ly/3HejmO9