Companies across the nation are concerned about inflation, but most have
very limited options to combat against this growing trend. Energy and health
care costs are the most worrisome. The article "the deep dive, that rising
feeling" by Kate O'Sullivan, in the September 2011 edition of CFO Magazine,
sites many CFO's with the challenge of eroding margins due to inflation.
Laura Beverly, the CFO for Half Price Books, is reluctant to raise prices
given the weak economy. Further, 54% of CFO's stated their firms absorbed the
increased expenses because they feared their customers would simply reject the
price hikes. However, small increases to the customer, will make a significant
difference to the bottom line. Many companies have negotiated with suppliers,
added surcharges, or found efficiencies in their organization to offset the
effects of inflation. It boils down to the age old dilemma of managing profits
and keeping the customer happy...however these days...it boils down to keeping the customer.
